Emerson Electric Delivers Pretty Powerful Earnings
, maker of thermostats, electrical motors and uninterruptible power supplies, delivered a decent second-quarter report today, with sales that rose 14% to $6.57 billion. The company cited strong demand from the oil and gas industry as well as sales of its network power systems.
Management is slightly raising the full-year guidance to a range of $3.05 to $3.10 per share, above the previous $3.00 to $3.10 range.
Emerson stock is down about 15% this year, and we are keeping a close eye on any further deterioration. For now, investors may want to hold off adding to the position, even though the stock remains on our "Recommended" list. We'd like to see how the company is able to execute if there is any dropoff in demand from its energy customers. The stock does have a decent 2.51% dividend yield, based on last night's closing stock price of $47.83.
Archer Daniels Midland Profit Decreases on Ethanol Decline
Archer Daniels Midland
continues to flounder, as the second-quarter results came in 12 cents below expectations. Profit margins are being hit by high corn, energy and transportation costs. ADM shares are hitting a two-year low as the ethanol craze has all but died out.
The company is also seeing grain prices correct, on favorable U.S. crop weather and profit-taking. The bull market in corn is also hurting the stock, eroding ethanol margins and reducing incentives for farmers to produce alternative fuels from crops.
We continue to think ADM is a stock to avoid. ADM had a big run-up three months ago, which was a great time to take profits. The stock has a mediocre dividend yield of 1.90%, based on last night's closing stock price of $27.40.
W&T Offshore's Record Revenue Yesterday's News
gave investors what they were hoping for in the last quarter, but the stock has tumbled more than 15% in early trading. We've been talking about a funds rotation for weeks, wherein money is leaving the previously hot energy-related plays. Today's reaction to what were solid earnings speaks volumes.
The company produced record revenue of $461 million, up 69%. Management was upbeat about the results, similar to how many homebuilders were back in 2007, when those stocks began cooling dramatically.
The big lesson here is that Wall Street is always looking forward. This phenomenon can be very frustrating to investors, who need to always remember that what Wall Street thinks is coming matters as much (or more than) what just happened.
The Street's reaction to WTI's solid earnings report does not bode well for other energy plays, which is why we have been removing many energy-related names from our "Recommended" dividend stocks list. The low dividend yields of many high-flying energy plays also factored into our cautiousness about adding to shares that were already up big.
Procter & Gamble Beats Earnings, Lowers Guidance
Procter & Gamble
, whose brands include Tide, Gillette, Pampers and many others, beat the EPS estimates by 2 cents in the latest quarter. The company was able to increase prices to counter rising energy and raw materials costs.
Management also pointed to favorable foreign-exchange rates and solid double-digit growth in emerging markets. The company did, however, take 2009 EPS numbers down slighty. The company now sees $3.80 to $3.87 per share, below the $3.85-$3.94 range analysts had been expecting.
We would prefer to add to shares on pullbacks. The company would be a great buy under the $60 level. Be patient and don't be afraid to pick up shares on that type of pullback. The company has a 2.13% dividend yield, based on last night's closing stock price of $65.82.
Cedar Fair Brings Thrills to Customers, Investors
just issued a solid second-quarter earnings report. Sales rose 8% to $296.2 million. The amusement parks, water parks, and active entertainment company did surprisingly well, considering difficult economic conditions in several of its key markets.
Management was able to reaffirm full-year guidance of net revenue between $990 million to $1.02 billion. We previously had some worries about Cedar Fair, but this positive report has abated some of our concerns. Many families have been cutting back on discretionary spending, but the company has done a good job at keeping its local foot traffic consistent. Credit management for a well-executed business plan.
In light of this report, we are lifting FUN shares onto our "Recommended" list. The company has a very attractive 9.55% dividend yield, based on last night's closing stock price of $19.90. Keep in mind that limited partenships, which is what Cedar Fun is, are handled differently from a capital gains standpoint. Be sure to consult with a tax adviser so you know the ins and outs of how this company's status may affect your returns.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.