Praxair Shares Up Despite Cutting Outlook and Jobs
announced late Tuesday that it is cutting its profit outlook for the fourth quarter and said it was implementing cost-cutting measures.
The company plans to lay off 1,600 workers and close under-performing and non-core product lines. Management said the moves are necessary to make sure the company has a cost structure appropriate to the current economic environment.
As for the outlook, the company EPS for the quarter to be in the range of 95 cents to $1 -- below its previous expectations for earnings of $1.03 to $1.08. The consensus estimates on Wall Street is for $1.04.
We had removed shares of Praxair from our "Recommended" list back on Aug. 18, when then the stock traded at $89.27. The company has a 2.63% dividend yield, based on last night's closing stock price of $56.95. The company does have technical support in the $47 to $50 area, but if that fails to hold, then the $30 level is a possibility. For now, we would wait to see if shares can stabilize at current levels, before considering a long-term position.
Praxair is not recommended at this time, holding a Dividend.com Rating of 3.0 out of 5 stars.
Rio Tinto Shares Rally on Job Cuts Announcement
announced it will cut as many as 14,000 job globally, including 8,500 contractors.
The company intends to cut capital expenditures in half for next year and sell further assets. The move is intended to cut the company's net debt by $10 billion by the end of 2009. Management also suggested it will not be aggressively raising its dividend payouts, as it has historically done.
We had removed shares of Rio Tinto from our "Recommended" list back on July 24, when the stock was trading at $386.50. The company has a 7.44% dividend yield, based on last night's closing stock price of $73.09. The stock can possibly have a bounce short-term that can test the $100 area, but we would gear this toward short-term investors and would not make any long-term bets until shares consolidate a bit.
Rio Tinto is not recommended at this time, holding a Dividend.com Rating of 2.9 out of 5 stars.
Former "Value" Play Dynegy Updates 2009 Guidance
announced it expects 2009 earnings on a GAAP basis to range from a $20 million loss to an $85 million profit.
Management anticipates solid results from its power generation business in 2009, and believes its strengths are its capital structure, including approximately $1.9 billion in liquidity and no significant debt maturities until 2011. The company also emphasized a low-cost coal fleet and key fuel and transportation arrangements, which are contracted for several years.
You would think after reading the company's press release that we find a healthy stock price. Unfortunately, this "value" play is fighting to stay above $2 a share. The stock had been trading in the $9 range earlier this year, but has since corrected dramatically with the energy sector selloff. Dynegy is another stock that market pundits were anointing a cheap "value" play. Again, investors need to remember to adopt a sell strategy when an analyst call goes bad. We would avoid the shares here, and look for a better investment play.
Dynegy does not currently pay a dividend.
Genworth Inches Closer to TARP Funds Access
has announced it has entered into a stock purchase agreement with Interbank.
The parties had previously announced that they had entered into an agreement in principal providing for the acquisition of InterBank, which was subject to negotiation of a definitive acquisition agreement.
The completion of the proposed acquisition is subject to the approval of the U.S. Office of Thrift Supervision, Genworth receiving approval to participate in the U.S. Treasury Department's Capital Purchase Program under the Troubled Asset Relief Program (TARP), as well as the satisfaction of other customary closing conditions.
We've said this before and we'll say it again -- we can only hope that this type of process is being scrutinized properly. There are plenty of moving parts to the bailout, and the feeling we get from reading about these "acquisitions," is that companies are simply finding ways to exploit the system. Investors should take a look elsewhere for better investment opportunities.
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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.