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Volcom Research Report 3

Volcom Research Report 3 - NASDAQ VLCM VOLCOM INC BUY A A A...

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VOLCOM INC VLCM NASDAQ: June 27, 2010 BUY HOLD SELL BUY BUY BUY RATING SINCE 04/30/2010 TARGET PRICE $26.01 A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate NA Annual Dividend Yield NA Beta 1.83 Market Capitalization $483.1 Million 52-Week Range $11.10-$24.79 Price as of 6/24/2010 $19.82 Sector: Consumer Goods & Svcs Sub-Industry: Apparel, Accessories & Luxury Goods Source: GICS This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet.com Ratings nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet.com Ratings, Inc. Copyright(c) 2006-2010. All rights reserved. PAGE 1 Report Date: June 27, 2010 VLCM BUSINESS DESCRIPTION Volcom, Inc. designs, markets, and distributes clothing, footwear, accessories, and related products for young men and women primarily under the Volcom brand name in the United States and internationally. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change 5.93 63.80 -25.02 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues 13.32 -10.04 10.54 Net Income 78.53 51.05 -5.62 EPS 82.35 51.47 -5.49 RETURN ON EQUITY (%) VLCM Ind Avg S&P 500 Q1 2010 11.17 18.52 10.37 Q1 2009 8.50 16.97 4.28 Q1 2008 20.00 22.45 13.07 P/E COMPARISON 19.24 VLCM 20.36 Ind Avg 21.06 S&P 500 EPS ANALYSIS¹ ($) 2010 Q1 0.31 2009 Q4 0.14 Q3 0.54 Q2 0.04 Q1 0.17 2008 Q4 -0.36 Q3 0.67 Q2 0.20 Q1 0.38 NA = not available NM = not meaningful 1 Compustat fiscal year convention is used for all fundamental data items. Weekly Price: (US$) SMA (50) SMA (100) 2 Years 1 Year 2009 2010 5 8 10 13 15 18 20 23 25 28 TARGET PRICE $26.01 TARGET PRICE $26.01 TARGET PRICE $26.01 TARGET PRICE $26.01 TARGET PRICE $26.01 Rating History HOLD BUY 0 2 4 6 Volume in Millions COMPUSTAT for Price and Volume, TheStreet.com Ratings, Inc. for Rating History RECOMMENDATION We rate VOLCOM INC (VLCM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, compelling growth in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow. HIGHLIGHTS The revenue growth came in higher than the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 13.3%. Growth in the company's revenue appears to have helped boost the earnings per share. VLCM's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.19, which clearly demonstrates the ability to cover short-term cash needs.
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