Without much action on the day of earnings announcement, the stock price of NowAuto Group Inc. (OTCBB: NAUGE, NAUGE message board or NAUGE.OB) took off on Tuesday albeit with large volatility. With the price fluctuation totally different from the overall market, it is difficult to determine the nature of this price movement.
One thought would be that it relates to NowAuto's earnings release, which reached the press on Monday. On the other hand, the report wasn't too promising. With revenues up to $5.4 million from a year ago $4.5 million, the company still incurred an increase in its loss.
On the other hand the company has reported increased sales, which might continue for coming periods as well. The troubling factor of this is a reported 27% increased in receivables (compared to previous year), which means the company might be selling under conditions too favorable for the buyers and thus making their own working capital turnover worse.
On top of that the company has virtually no cash, as most of their short term assets are in receivables. They're highly leveraged and can't cover even the short term liabilities, and due to losses, the situation is only getting worse. All in all, this might be a company to buy a car from, but definitely not the company to put your money in.
User comments