Legg Mason: We're Right and the Market's Wrong

Asset manager

Legg Mason

(LM) - Get Report

just reported its second-quarter earnings numbers, which showed a revenue drop of 13%. The company revealed that assets under management fell 7%, from $992.4 billion last year to $922.8 billion as of June 30.

The company has struggled with underperforming funds, which have some of its investors frustrated and looking elsewhere for better performance. Legg Mason CEO Mark Fetting then made a baffling statement, saying "... we believe that when the credit crisis abates, and as the broader markets turn toward a renewed focus on fundamentals, this will bode well for our underperforming managers."

In other words, the market is wrong and their managers have it right. One thing investors should always remember is that the market tape is the final arbiter of who is right and wrong.

Legg Mason shares are down 50% year to date, and the company has a dividend yield of 2.51% (based on last night's closing price of $38.21). We actually think the company presents some interesting value at these levels, but we would like to see the shares sustain above recent lows for a bit before we get on board.

Eastman Chemical's Cautious Guidance an Opportunity to Buy

Eastman Chemical

(EMN) - Get Report

delivered a second-quarter report that was essentially in line with what Wall Street analysts had been expecting. The company sees the next quarter as being flat compared to last year's numbers.

Management is citing a slow U.S. economy and rising raw material and energy costs as contributors to the cautious tone of their earnings report. Eastman stock is taking a big hit so far today, down about 7% at the time of this article's publishing.

We think this selloff may be a mistake, considering the recent

Dow Chemical

(DOW) - Get Report

premium offer to buy

Rohm & Haas

( ROH). We consider shares of Eastman Chemical a good risk/reward at these levels. The company also has a 2.68% dividend yield, based on last night's closing price of $66.38.

Beckman Coulter: Diagnostic Equipment Buy?

Beckman Coulter

( BEC) just reported second-quarter earnings, and the biomedical diagnostics equipment company has lifted the lower end of its earnings range to $3.55-$3.60. The company is targeting 12%-13% revenue growth.

Management credited its Clinical Diagnostics business for this quarter's 15% revenue gains. The company is now moving toward the upper end of its six-month trading range. We feel the company is fairly valued here, so investors may have better opportunities elsewhere. At 20 times earnings and a low dividend yield of 0.97% (based on last night's closing price of $69.85), we would consider recommending this stock only if its price drifted a bit lower.

The company may have appeal as a takeover play, so we will be monitoring deals in the diagnostics space, and we'll be sure to keep you updated if there is any change in our ratings.

How Do You Spell Defense? ITT

ITT Industries

(ITT) - Get Report

is raising its full-year profit forecast to $4.11-$4.17 per share, above consensus estimates of $4.10. ITT's diversified product mix of industrial products, military technology and water treatment all delivered solid results.

The stock has been on a consistent run for the last two years, up about 40% in that time period. At 16 times 2008 earnings, ITT stock is presenting a good value for investors. We have just added the name to our "Recommended" dividend stocks list today. However, investors should probably wait for shares to pull back a bit from today's euphoria (shares are up over $3 at the time of publishing this article) before considering a purchase.

ITT Industries has a dividend yield of 1.12%, based on last night's closing price of $62.67.

Should Investors Make a Toast to Fortune Brands?

Fortune Brands

( FO)delivered earnings results today that were better than what Wall Street had expected. The wine and spirits, housewares and golf company also raised its annual dividend payout from $1.68 to $1.76 per share.

Despite the good news, management is cautioning that weak consumer sentiment, a slumping real estate market and higher taxes would dampen the rest of the year's outlook. Revenue for this quarter fell 9 percent to $2.1 billion. The company was not specific on the exact range, but it appears the rest of 2008 may be in the $4 to $4.50 earnings per share range. Analysts are at $4.36. We think the company is becoming attractive at these levels, and a further correction may prompt us to raise our ratings, based on what we see as a good risk/reward.

Fortune Brands has a dividend yield of 2.88%, based on last night's closing price of $58.29.

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.