FreightCar America Misses Its Train
is getting clobbered today after missing Wall Street earnings expectations. Sales fell more than 27 percent in the quarter to $141.3 million. The railcar company is getting squeezed on sharp material-cost increases on some of its fixed price contracts.
The big negative for the company is a reduction in orders for new railcars, which totaled 1,436 units in the last quarter. Previously, the company had received orders of 2,396 units in the first quarter of 2008, and 2,262 units in the second quarter of 2007.
Until FreightCar America can better execute its business model, we would urge investors to avoid these shares. The company has a small dividend yield of 0.66% (based on Friday's closing stock price of $36.13). Take a look at other names in the railroad sector for better returns.
MDU Resources Has Positive Quarter, Raises Guidance
just reported a solid quarter in which profits were up 29% on strong natural gas and oil production. The company believes the rest of the year will continue to be strong, as energy prices continue to fetch historically high prices.
Management is increasing guidance to a range of $2.10 to $2.35 per share, above its previous estimates of $1.85 to $2.10 per share. MDU is a well-diversified company, conduction operations in five different areas: natural gas and oil production, natural gas pipelines and energy services, construction materials and contracting, construction services, and electric and natural gas utilities.
We find shares of MDU Resources attractive at present levels. The stock is up nearly 120% in the last five years, climbing slowly and steadily (which, as we all know, "wins the race"). Paying 15 times earnings for this company's revenue growth is also not expensive. The company has a 1.83% dividend yield, based on Friday's closing stock price of $31.65.
Nicor Gases Up Profits
just announced a big beat of sales estimates for it latest quarter. The company had a 26% jump in sales to $699.8 million, easily beating the consensus number of $584 million. Nicor achieved higher gas distribution revenue and strong cost controls to deliver the blow-out numbers.
In other good news, the company was able to reaffirm its full-year earnings outlook of $2.20 to $2.40 per share.
Nicor has been in a trading range of $33-$45 per share over the last 12 months. With a 4.72% dividend yield (based on Friday's closing price of $39.40), these shares are a solid play for dividend investors. This company is especially a good buy on any pullbacks to the mid-30s level, but is still attractive at present prices.
Cooper Tire Earnings Deflate
just reported a tough quarter, which showed a loss that was actually worse than what Wall Street was expecting. The company did beat the revenue estimates due to price increases for its goods, which is a growing trend and an indicator of inflation.
Cooper management is very cautious in the short term, as consumers are driving less, and raw material costs continue to hit the bottom line. The company is also blaming higher utility costs as a reason production has slowed, and in some cases, temporarily stopped.
The auto industry has been a real danger zone for investors this year. We have very little exposure in our Dividend Stock Recommendations to this troubled area. Cooper Tire shares are down over 70% in the last 12 months, and we have no desire to call a bottom at this point. Although CTB has a nice-looking dividend yield of 4.89% (based on Friday's closing price), we would urge investors to look elsewhere for better dividend stock opportunities.
Church & Dwight Hammer Earnings
Church & Dwight
delivered a solid report this morning, beating estimates and upping it forecast. The maker of Arm & Hammer baking soda and Trojan condoms earned 66 cents a share, 3 cents better than consensus estimates.
The company implemented price increases on condoms, as well as its Arm & Hammer powder laundry detergent and Nice 'n' Fluffy liquid fabric softener. Management is raising full-year EPS estimates to $2.83-$2.85, above the consensus estimates of $2.81.
We think CHD shares are a solid investment, but would rather wait for pullbacks to accumulate shares. The dividend yield of 0.66% (based on Friday's closing price of $54.75) is small, and not much of a cushion on the downside. The stock is up nearly 10% this year, which is a great sign, considering many stocks are deeply in the red for 2008.
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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.