For Immediate Release
Chicago, IL –August 09, 2010 – Zacks Equity Research highlights: AMERCO (UHAL) as the Bull of the Day and Goldman Sachs (GS) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Wal-Mart (WMT), Target (TGT) and Toyota (TM).
Here is a synopsis of all five stocks:
AMERCO (UHAL) is the parent company of U-Haul International, the largest consumer truck rental company in the world. It is also the second largest self-storage company in North America.
The impact of the decline in housing and a decrease in apartment occupancy rates appears to have ended. We expect continued improvements in operating parameters. Based on a low valuation of EBITDAL, we continue to rate the stock Outperform with a price target of $80.00 a share.
The stock has usually been valued on EBITDAL (EBITDA plus lease expense) per share, selling between two and three times EBITDAL. Based on our estimates for the next four quarters EBITDAL of $36.49 a share, we would expect a price range of $55 to $91. We expect a valuation at the mid-end to high end of the range.
We are downgrading our recommendation on Goldman Sachs (GS) to Underperform from Neutral, based on the effects related to Securities and Exchange Commission (SEC) charges and the negative impact of new financial regulatory reform.
Litigation issues not only impact a company's reputation but also dent its financials. Further, the new regulatory reform will continue to pressure trading revenues, which will hurt the profitability of Goldman in the upcoming quarters.
Our six-month target price of $142.00 equates to about 9.5x our earnings estimate for 2010. Combined with the $1.40 per share annual dividend, this price target implies an expected negative total return of 8.5% over that period, which is consistent with our Underperform recommendation.
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Employment Report In-Depth
The private sector job gains were a little bit short of expectations of about 80,000 job gains. The big disappointment was the sharp downward revision to just 31,000 private jobs gained in June rather than the 83,000 reported last month.
The goods producing sector added 33,000 jobs, up from a loss of 3,000 jobs in June (originally -8000). The services sector added 38,000 jobs versus 34,000 in June, although the June number was revised down from a gain of 91,000 jobs. Relative to the state of things a year ago, though, these are very good numbers. Last July, the economy lost a total of 346,000 jobs including 297,000 in the private sector, 128,000 in the goods producing sector and 169,000 in the service sector.
Within the goods producing sector, manufacturing added 36,000, up from a gain of 13,000 in June. That makes seven straight months of manufacturing job gains. The last time that statement could have been made was back in March of 1998. Since the start of the year, the economy has added a total of 183,000 manufacturing jobs.
As the graph below shows, that does not begin to reverse the secular decline that manufacturing employment (blue line, left scale) has been in since 1979. The peak in manufacturing employment was back in July 1979 at 19.531 million. The decline in factory jobs really accelerated in 2001; in January 2001 there were still 17.211 million factory jobs in the country. Even with the recent rebound, today there are just 11.717 million manufacturing jobs.
There have been two forces at work here. First is automation, which means employers can make the same or more stuff with fewer workers. The second is the shipping of jobs overseas where labor costs are much lower. Since we no longer make the stuff here we import it.
The trade deficit is entirely on the goods side; we actually regularly run a small trade surplus in services. While about half the goods trade deficit is due to oil, the rest is from all the imported stuff that fills the aisles of Wal-Mart (WMT) and Target (TGT). While over the years foreign auto makers such as Toyota (TM) have gained significant market share from domestic auto makers.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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.
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GOLDMAN SACHS (GS): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
AMERCO INC (UHAL): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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