Bush's current problems sound eerily similar to those experienced by O'Sullivan, but more severe. Slower than expected revenue growth has been compounded by manufacturing issues at a recently acquired manufacturing facility. Analysts expect earnings to continue falling for the next two quarters with a rebound in the latter half of 1999. While the stock is trading just under 11x current First Call estimates for 1999, those projections are more tenuous since they incorporate a turnaround that is not assured. Investors should never stop at the income statement when looking at a company.
Key information is also available on the balance sheet and statement of cash flows.
While not absurdly high, I prefer seeing the number a little lower when a company is in a somewhat cyclical industry. O'Sullivan definitely has a more favorable financial structure for investors. I also checked out two balance sheet statistics for each company, days sales in inventory and days sales in receivables, to measure the efficiency with which working capital is managed. O'Sullivan had 51 days sales in inventory whereas Bush had a slightly higher 55 days. Both companies appear to maintain inventories at similar levels.