What do you make of the earnings?

Q4-06 EPS of $0.44 ! Exceeded analysts concensus forecast of $0.28 by
a HUGE margin. What do I think? This stock is CHEAP at $35.64 !!! I
come up with a P/E ratio of 30.7 for the FY2006 (on a fully diluted
basis). Factor in a >100% growth in 2007 earnings, this stock can
easily go to $60 by years-end. Buy buy buy.

I don't understand the price drop in the after hours ?? :-/
 Why is that ??
Can anybody draw some conclusion here on why the price is tumbling
after hours???

Maybe the after-hours (AH) price drop has to do with:
1) Almost 6% run up in the stock during the regular trading day
(granted, the market as a whole had a strong rally too)
2) Although earnings were out of the park, future guidance seemed
mediocre/in-line (I'm just a beginner so I may be totally wrong but
I've learned the market cares more about the future than the past)
3) AH can be unpredictable... I was watching a stock (SYKE) last night
and it was up maybe 5 to 6% at most after announcing earnings - but at
least twice came back equal to the closing price(!) .... then today,
during regular trading it hit a high of 19.71 (a 23%+ gain from the
previous day's close)
4) Given the high number of short sellers that seem to be still in
this... maybe they are still in charge?

Hope you r correct. Even about the future prospects I thought the CEO
mentioned atleast a 20% - 30% growth every year .... which is not bad
in my view. Though it is AH I'm worried a bit at the price drop coz
the volume is high. That's what is bothering me. Hope it is just some
stupid guy unloading whole lot of his shares and not many. ;)

ok...Management stated they had over $50 million of backlogged sales
at the end of 2006...so we start at a base for 1Q of $50 becasue they
would have been able to ship those items during the 1Q 07. If they can
get $50 million in sales in 1Q07 a the current margins of 17%...and
28.3 million shares outstanding as stated in the CC...we are at $.30 a
shares for 1Q...current est is .15. Additionally they stated they sold
6.2 million pairs of Heelys which translates to average revenue per
shoe of $30...this 6.2 million was with backlogs of shoes due to
production constraints. The stated in the call that they have current
production ability of 1.2 to 1.4 million pairs a month....if they can
sell 10 million pairs this year that is $300 million in revs for 07
and at a profit margin of 17%...that is 1.80 a share compared to
current estimates of 1.21...that would be a beat of 50% on the current
estimate. We beat today by 57% with production constraints. They also
noted that they would use their production capabilities to possible
add to the product line by adding straight shoes...no wheels...to
their product lines. This is how I see heelys beating the FAD moniker
and being a long term buy...that is what management knows and it seems
they are going to utilize their facilities to maximize shareholder
value. With a forward PE of 25...high end of management expected long-
term growth rate of the company...stock deserves to be at least
$45...but at this point it deserves a high PE of close to 30-40...$54
to $72...look for upgrades on Heelys and raised price expectations
based on this first quarter of results...the stock was trading based
on current estimates and got all the way to $40...next stop
$50....after 1Q07 earnings...I listened to the call twice

HLYS is a highly speculative stock, IPO was mostly with insiders
selling their allotments. A lot of people bought it with the intention
of waiting for their first official earning report hoping to make some
money with good timing. At this point all the speculative interest is
gone or going, it will take some major event to turn it around imho.

How is it highly speculative when it just crushed earnings and it has
positive growth...CROX has a market cap of twice Heelys. Additionally
the stock has 35% of its float shorted...tomorrow morning there will
be a reversal of fortunes from what has been seen in AH. The shorts
will begin to cover as upgrades hit and some of the other analyst
change their view on the future earnings potential of heelys...they
are growing at over 300% and they are only trading at 4.5*
revenues...There was a $40 price target on the stock with 06 EPS est
at .95 and 07 earnings at 1.21...they had 1.16 eps for 06...if you
only add what they beat 06 earnings by to next years eps that is
1.42...at a low PE of 30...that is $42 a share...expect to see a
higher open than where we sit in AH....I think HLYS can do $1.80 in
07....at 30 multiple that is $54.I thought hlys would have .42...they
beat that by .02...not one analyst had hlys earning .44 a shares...the
speculation is out and the shorts are going t have to cover all the
way through an ATH once the upgades hit.

Jefferey's got it right. This stock will surge - it's got everything
going for it. I estimate it will hit $60 sometime this year. I'm not
paying too much attention to the afterhours trading. This stock will
go up tomorrow.

JP morgan just came out with an analyst report and it is looking
good.  although this analyst does not give price targets he upped all
his estimates and kept his overweight rating. i know i'm excited to
see where this baby opens in the morning.  my next question (assuming
a nice run up tomorrow) is where do you sell the stock at? do you
think we hold this for at least another quarter or dump it now? i know
when i went to stores and asked about heelys before christmas a lot
had sold out and afterwards had huge shipments coming in so i'm
thinking Q1 could be good but i've also heard that they are starting
to lose the fad appeal.  I never know when to sell what i consider a
fad stock.

I have seen kids with new looking pairs of heelys olling around quite
abit. These shoes are being worn by every demographic and every income
range. I was getting my hair cut and there were at most 8 people in
the building and one of them was a kid wearing a pair of new heelys. I
was walking out of Bed Bath abd Beyond and a mom was pulling her 2
sons on their heelys. One of my fried said she went to the mall and
counted 20 kids with heelys wheeling around. I have seen more heelys
on kids than crox lately...I would hold until the next quarter, but if
heelys bring more comments about a reg. shoe line this may have more
staying power.

Think also about the international markets. Kids are wearing them in
South America and Europe (I've seen them myself on two recent trips!)
- I assume Asia as well.

Do everyone on the board a favor and do not post false statements
about a JP Morgan upgrade...obviously from the current news reports
and the action that occurred today that was not the case. I suggest no
one listens to ak1...unless he can provide a link to a reputable
source and I am sure he cannot.

It's not a false statement here is the article from Bloomberg....

March 7 (Bloomberg) -- Shares of Heelys Inc., the wheeled- sneaker
maker that went public in December, fell 9.7 percent because its
earnings goals lacked detail and appeared to underestimate its
potential, an analyst said.

Shares fell $3.47 to $32.17 as of 3:59 p.m. New York time in Nasdaq
Stock Market composite trading. They had risen 9.3 percent in the past
year before today.

The decline came the day after the Carrollton, Texas-based company
stated a goal of increasing sales and earnings 20 percent to 25
percent over the next several years. That would represent a slowing
momentum; Heelys' fourth-quarter net income increased eightfold to
$11.5 million, or 44 cents a share, as sales rose 377 percent to $71.1
million.

``I think people are a little disappointed that the company didn't
give a little more detail in earnings guidance, which I think is
ridiculous,'' Robert Samuels, a consumer products analyst with JP
Morgan Securities Inc. in New York, said.

``It doesn't take a rocket scientist to see that clearly the trends
are much better than'' Heelys' stated goals, said Samuels, who has an
``outperform'' rating on the shares.

Heelys, whose target audience is described by Samuel as youngsters age
6-14, said its performance was boosted by more advertising and
marketing programs and increased manufacturing capacity. Samuels today
raised his 2007 and 2008 earnings estimates to $1.35 and $1.60 a share
from $1.08 and $1.26.

Here is the link that everybody may want to look. He did not post a
false statement. The JPMorgan analyst says the downward turn is
ridiculous.
Here is the link.
http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=H...

Thanks sellers, you've cheapened the stock for me and now I'm going to
buy some more. From the Bloomberg article: ``It doesn't take a rocket
scientist to see that clearly the trends are much better than''
Heelys' stated goals, said Samuels, who has an ``outperform'' rating
on the shares.

On another topic, somebody mentioned this is a fad stock ... so
what??? what's wrong with fad stocks? I will give you a few examples
of a recent fad stocks and how some made a killing owning them:

- AAPL (the ipod) up 550% in 3 years
- XMSR (XM satellite radio) 2002-2004 up 1200% in 2 years - granted it
is a dog right now
- TASR (Taser stunt guns) 2003-2004 up 3000% in 1 year - another dog
right now

What I'm saying is the following: maybe HLYS will follow the path of
XMSR and TASR, but that is still a few years away. For the time being
this stock has only one side: UP

I have still not seen anything come out that he reiterated his
outperform on Heely's. Yes this guy made comments, but I have not seen
anything that states he has reiterated his outperform. That would be
key. And trust me I would love for him to make a reiteration on his
outperform and maybe someone to come out and say it is a buy from a
nuetral here, but that has not happenned.

I read the earnings release and listened to the conference call and
still couldn't explain the puzzling 29% difference in the full year
diluted earnings of $1.16 and the much higher non diluted number of
$1.50 per share.
So I called Investor Relations for an explanation and found out that
the 29% difference was largely due to one time IPO expenses. And going
forward the 7% difference in Q4 06 is a lot more representative than
the 29% full year difference.

So adjusting away the IPO expenses I figure the "real" earnings power
for 2006 was the non diluted $1.50 x .93 = $1.40 per share.
Most companies would have broken out that number of earnings before
non recurring expenses or charges, but Heelys chose not to. Since the
IPO expenses will not recur in 2007, they can meet the current
consensus estimate of $1.40 without any sales growth. More likely they
will report well above the consensus estimate.

Say you are expecting 30% sales growth for 2007 with unchanged
margins. Since the IPO expenses will not recur I believe it to be more
accurate to project that growth rate over the higher $1.40 number x
1.3 = $1.82 per share.

I am currently long HLYS.