N@N

Deckers Outdoor, POSCO, The Goldman Sachs Group, JPMorgan and Morgan Stanley

^{Published on 2010-07-21 14:10:39 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--[ Zacks Equity Research ] highlights: Deckers Outdoor (Nasdaq: [ DECK ]) as the Bull of the Day and POSCO (NYSE: [ PKX ]) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Goldman Sachs Group Inc. (NYSE: [ GS ]), JPMorgan Chase & Co. (NYSE: [ JPM ]) and Morgan Stanley (NYSE: [ MS ]).

Full analysis of all these stocks is available at [ http://at.zacks.com/?id=2678 ].

Here is a synopsis of all five stocks:

[ Bull of the Day ]:

The strong demand for the UGG brand product line, new product introductions, and in-demand inventory has helped Deckers Outdoor (Nasdaq: [ DECK ]) to achieve robust growth. The company's top-line has increased at a compound annual growth rate (CAGR) of 32% in the last five fiscal years.

The company's efforts to expand internationally are also encouraging. The international markets provide a significant growth opportunity, and we remain optimistic about the company's incremental sales and earnings potential.

The company also portrays a healthy balance sheet with a significant cash balance and no debt, which provides it with ample liquidity to capitalize on future growth opportunities. As such, we maintain our Outperform rating on the stock.

[ Bear of the Day ]:

POSCO (NYSE: [ PKX ]), the largest steel producer in Korea, remains well-positioned to leverage from its expansion into the fast-growing markets in the years ahead. But lackluster operating earnings guidance due to higher raw material costs and anticipated increases in Chinese steel volume exports are stiff headwinds for the second half of 2010.

Rising competition will result in significant price competition, declining margins and reductions in revenue. Moreover, concerns over gains/losses from volatility in foreign currency and the cyclical nature of the industry will restrict share price performances.

Thus, we downgrade our recommendation from Neutral to Underperform. Our $92.00 target price, 7.8X 2010 EPS, reflects this view.

Latest Posts on the Zacks [ Analyst Blog ]:

Goldman: Lower Top-Line Growth

The Goldman Sachs Group Inc. (NYSE: [ GS ]) second quarter 2010 earnings per share of $2.75 were significantly ahead of the Zacks Consensus Estimate of $2.10. Including the impact of $600 million related to the U.K. bank payroll tax and $550 million related to the Securities and Exchange Commission (SEC) settlement, earnings per share were 78 cents for the second quarter of 2010.

Last week, Goldman announced that it would pay $550 million to the SEC to settle a civil fraud suit linked with mortgage investments, which had been filed in April. During the second quarter of 2010, the U.K. enacted a law that imposed a non-deductible 50% tax on certain financial institutions in respect of discretionary bonuses in excess of 25,000 ($0.4 million) awarded under arrangements made between December 9, 2009 and April 5, 2010 to relevant banking employees.

GAAP net income in the quarter was $613 million, compared with $3.5 billion in the prior quarter and $3.4 billion in the prior-year quarter.

Goldmana™s results reflected a difficult market environment during the reported quarter, which resulted in decreased client activity across its businesses.

Behind the Headlines

Total revenue of Goldman decreased 31% from the prior quarter and 36% year over year to $8.8 billion. Revenue by business segment is as follows:

Investment Banking division generated revenues of $917 million, down 23% from the prior quarter and 36% year over year. Results reflected a decrease in revenues from debt and equity underwriting, primarily attributed to lower levels of industry-wide activity. However, these were partially offset by higher-than-expected revenues from financial advisory business as a result of an increase in client activity.

Trading and Principal Investments division generated revenues of $6.55 billion, significantly down 36% from the prior quarter and 39% year over year. Results deteriorated as a result of a decrease in revenues in equity trading (down 62% year over year) and fixed income (down 35% year over year), partially offset by the Principal Investment portfolio which increased 16% year over year.

Asset Management and Securities Services division generated revenues of $1.37 billion, up 2% from the prior quarter but down 11% year over year. While revenues from Asset Management improved, Securities Services slumped 35% due to rigid securities lending spreads.

Operating expenses decreased from $7.62 billion in the prior quarter to $7.39 billion and were down 15% year over year. Expenses declined as a result of lower compensation and benefit costs during the quarter.

Non-compensation expenses were $2.99 billion, up 41% from the prior quarter and 44% year over year, primarily due to the impact of net provisions for litigation and regulatory proceedings, higher professional fees and brokerage, clearing, exchange and distribution fees during the reported quarter.

Evaluation of Capital

As of June 30, 2010, Goldmana™s Tier 1 capital ratio under Basel I was 15.2%, up from 15.0% as of March 31, 2010. Tier 1 common ratio under Basel I was 12.5% as of June 30, 2010, compared with 12.4% as of March 31, 2010. During the reported quarter, ROE on an annualized basis decreased substantially to 7.9% from 20.1% reported in the prior quarter.

Goldmana™s book value per share improved 1% to $123.73 compared with $122.52 as of March 31, 2010. Tangible book value per share increased 1% to $112.82 from $111.41 as of March 31, 2010. Assets under management decreased by $38 billion to $802 billion in the quarter, due to $24 billion of net outflows primarily in money market assets.

Dividend Update

Goldman declared a dividend of 35 cents per share to be paid on September 29, 2010 to common shareholders of record as of September 1, 2010.

Performance by Peers

In Goldmana™s peer group, JPMorgan Chase & Co. (NYSE: [ JPM ]) reported positive results with a net income of $4.8 billion and revenue of $25.6 billion. Its impressive results were primarily bolstered by a slowdown in loan loss reserves, which more than offset a pressure on trading and investment banking revenues and a $550 million charge related to the U.K. bonus tax.

Morgan Stanley (NYSE: [ MS ]), another of its competitors, will be releasing second quarter earnings on July 21, 2010.

Get the full analysis of all these stocks by going to [ http://at.zacks.com/?id=2649 ].

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the [ Analyst Blog ] provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks [ "Profit from the Pros" ] e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting [ http://at.zacks.com/?id=7158 ].

About Zacks

Zacks.com is a property of [ Zacks Investment Research ], Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the [ Zacks Rank ], which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at [ http://at.zacks.com/?id=4582 ].

Visit [ http://www.zacks.com/performance ] for information about the performance numbers displayed in this press release.

Follow us on Twitter: [ http://twitter.com/zacksresearch ]

Join us on Facebook: [ http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts ]

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.