For Immediate Release
Chicago, IL – March 5, 2010 – Zacks Equity Research highlights Deckers Outdoor (DECK) as the Bull of the Day and School Specialty (SCHS) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Paccar (PCAR), Verizon (VZ) and AT&T (T).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506
Here is a synopsis of all five stocks:
The strong demand for the UGG brand product line, new product introductions and in-demand inventory has helped Deckers Outdoor (DECK) to achieve robust growth. The company’s top-line has increased at a 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 has a healthy balance sheet with a significant cash balance and no debt at the end of fiscal year 2009, which provides it with ample liquidity to capitalize on future growth opportunities.
The recent economic downturn has resulted in an uncertainty in the school districts related to state budget funding levels, which has led to a cautious spending approach. Consequently, School Specialty (SCHS) has been registering a sustained decline in the topline.
Continued softness in demand is witnessed in both curriculum-based products and supplemental materials. The furniture market has been the worst hit by budget cuts, as school construction and modernization projects have been cancelled or postponed.
Further, the intense competition and seasonality of business undermine the company’s future growth prospects. As such, we have an Underperform recommendation on the stock.
Latest Posts on the Zacks Analyst Blog:
On Productivity
Over the short term, the rise in productivity is mostly a reflection of fewer hours worked, rather than a robust rise in output. However, over the long term, there is nothing more important than productivity. It is what determines the standard of living in a country, not GDP.
After all, even under Mao, mainland China had a higher GDP than Sweden had, but the standard of living of a person living in Sweden was vastly higher than that of someone living in China at the time. Put another way, the principal difference between an American truck driver and a Chinese coolie is the truck. Both transport goods, but the U.S. truck driver is far more productive (tons moved per hour) because he has the tool, a big truck made by Paccar (PCAR). As a result he is able to have a higher standard of living.
In the short term, though, if a new truck design (say, pulling two trailers instead of just one) means that one truck driver is now out of work, his standard of living will go down, and the other driver (the one pulling two trailers) might go up a little bit. The trucking company, though, reaps a huge benefit, having to pay only one driver to move two trailers. Hence its unit labor costs go down. Higher productivity is both the enemy of employment (short term) and the powerful ally of higher standards of living (longer term).
Nowhere is this dynamic more apparent than in manufacturing. The manufacturing sector has been losing jobs in good times and bad for the last 30 years or so, yet total manufacturing output in the country has continued to grow.
The third graph shows that productivity growth in manufacturing is much more volatile than overall productivity growth, but has generally been far higher than in the rest of the economy. The data for manufacturing productivity alone does not go back nearly as far, however, but that allows for a clearer picture of more recent overall productivity trends in that graph.
Factory automation has probably caused more jobs to be lost than outsourcing to third-world countries. However, we don’t want to cure the unemployment problem by reversing productivity gains.
Think about it this way: back in the 1950’s most telephone calls were completed by actual physical operators (think Lily Tomlin: “one ringy dingy, two ringy dingy”). We could immediately solve the unemployment problem tomorrow, and have massive labor shortages, if we simply outlawed the computerized switching of phone calls and had to have calls completed by actual human operators. Of course, that would mean that we would be back in the days where parents set the egg timer when kids were talking to their grandparents long distance. It would probably also result in Verizon (VZ) and AT&T (T) going bankrupt in a very big hurry.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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