Zacks Bull and Bear of the Day Highlights: Guess?, Washington Federal, J.P. Morgan, Citigroup and Costco Wholesale Corporation

• On 7:49 am EDT, Thursday October 8, 2009

For Immediate Release

Chicago, IL – October 8, 2009 – Zacks Equity Research highlights Guess? (NYSE: GES - News) as the Bull of the Day and Washington Federal (NasdaqGS: WFSL - News) the Bear of the Day. In addition, Zacks Equity Research provides analysis on J.P. Morgan (NYSE: JPM - News), Citigroup (NYSE: C - News) and Costco Wholesale Corporation (NasdaqGS: COST - News).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

Guess? (NYSE: GES - News) reported better-than-expected results for the first half of 2010, thanks to strong North American sales, operating cost controls and smart inventory management. In addition, the company's strong cost-control efforts helped it maintain a lower operating cost structure, which in turn helped it navigate through the difficult economic conditions.

Management also issued optimistic guidance for the third quarter, although it declined to provide guidance for fiscal year 2010. For the third quarter, Guess expects revenue of $465-$485 million and EPS of 46-49 cents.

Given the company's positive outlook and strong control mechanisms, we upgrade the shares of Guess Inc. from Neutral to Outperform.

Bear of the Day:

Washington Federal’s (NasdaqGS: WFSL - News) third quarter earnings were in line with the Zacks Consensus Estimate. However, the results significantly deteriorated from the prior-year quarter due to a huge increase in provision for loan losses, primarily in response to a deteriorating residential land and construction portfolio.

Credit quality drastically worsened during the quarter. However, declining deposit rates helped improve funding concerns to a great extent and capital position remained strong.

Though margin expansion and increased market share through acquisitions will be a great support going forward, we are concerned about the company's significant exposure to real estate markets and suspect that it will continue to experience credit quality deterioration. Therefore, we recommend the shares as Underperform.

Latest Posts on the Zacks Analyst Blog:

Fed to Be On Hold a Long Time

There is a chance, however, that this policy could start to develop a bubble in stocks. There is a lot of money that has been pushed into the system. There is not that much demand by corporations -- especially the solvent ones that the banks would like to lend to -- to borrow lots of money to build new plants, or even take on more inventory. That money will try to find a home, and if it can't find it in the real economy, it will gravitate to the financial economy.

Thus, while keeping rates low does pose a risk, that risk looks mostly theoretical at this point. The very low Fed Funds rate means that there will also be a very steep yield curve.

This is good news for the banks, since their core economic function is to borrow short term -- for example by taking in checking deposits -- and to lend long term, for example making commercial and industrial loans. This will help big banks like J.P. Morgan (NYSE: JPM - News) and Citigroup (NYSE: C - News) earn enough from their current loans to help offset the massive losses they have hidden on other books of previous loans that have gone bad.

Costco Beats Zacks Estimates

Costco Wholesale Corporation (NasdaqGS: COST - News), the fifth largest general retailer in the U.S., has reported better-than-expected fourth quarter fiscal 2009 results with net income of $374 million or 85 cents per share, compared to $398 million or 90 cents in the year-earlier quarter. The quarterly earnings well surpassed the Zacks Consensus Estimate of 77 cents per share.

For fiscal year 2009, net income was $1.09 billion or $2.47 per share compared to $1.28 billion or $2.89 per share in the previous fiscal year. The year-over-year decrease in the fiscal results was primarily due to the continuing softness in the U.S. economy, higher employee benefit costs and negative impact of foreign currency translation.

Net sales during the quarter totaled $21.89 billion compared to $22.63 billion in the year-ago quarter, while net sales in fiscal 2009 were $69.89 billion compared to $70.98 billion in fiscal 2008. Although both the quarterly and yearly sales declined year over year, the figures were comparatively better than analysts’ expectations, suggesting an overall improvement in the weak U.S. retail environment.

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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