The reported margins are a load of hogwash. Every tech company on the asx seems to have 50%+ margins. They are accounting terms and will never ever come close to what an investor would expect as a possible net profit. Don't believe a word of it.
Go back 2-3 years. Look at its revenue base and cash burn. Compare it to today. Sure revenue's moved up a bit, but so has the cost.
You might want to say its growth costs. But the growth has been steady and consistent for years, so why would it be growing so rapidly? It's not an argument even the biggest SKF can argue.
Truth is, these companies will always be inclined to classify operating costs below the gross margin line, even if they are largely related to # of customers being supported (and not necessarily customer facing). They should all still be captured in the gross margin equation, but rarely are. It's a strict follow of the accounting rules, which is like I said, hogwash.
You can find dozens upon dozens of companies with margins as attractive as this, at the same market cap and also with decent growth. But it doesn't make them special.
SKF Price at posting:
6.7¢ Sentiment: Sell Disclosure: Not Held
