Dividend.com: Jabil Short-Circuited

The company sharply lowered second-quarter expectations, citing the economy.
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Jabil Circuit Sees Trouble Ahead

Jabil Circuit

(JBL) - Get Report

just announced its second-quarter revenue will come in below Wall Street's expectations.

The company is now forecasting earnings of 4 cents to 8 cents per share on sales of $2.8 billion to $3 billion, which is below consensus estimates of 20 cents per share on sales of $3.07 billion.

Management said it will be assessing present opportunities to ensure a more robust future when end markets stabilize and the recovery cycle begins.

We had removed shares of Jabil Circuit from our "Recommended" list on Sept. 3, when the stock was trading at $15.59. The company has a 4.33% dividend yield, based on last night's closing stock price of $6.46. The stock has technical support around the $5 price area, but any break of that and the name could test the $2.50 to $3.00 area. The company does have about $2 per share in cash, so the downside is not significant beyond that. We would still prefer to look elsewhere for better investment opportunities.

Jabil Circuit is not recommended at this time, holding a Dividend.com Rating of 2.8 out of 5 stars.

Potash Cuts 2008 Profit Forecast

Potash

(POT)

announced late Thursday that it is cutting its 2008 profit outlook.

The company is seeing weaker volumes in all three nutrients, along with lower prices and constrained margins in nitrogen and phosphate segments. The company is feeling the pullback in demand for crop nutrients as a result of the global economic crisis.

Management now sees 2008 EPS coming in at $10.75, which is 10% below the midpoint of the last forecast the company offered.

We had removed shares of Potash from our "Recommended" list back on Aug. 5, when the stock was trading at $180.14. The company has a .54% dividend yield, based on last night's closing stock price of $74.22.

This has been one of our better calls since we have been rating dividend stocks. We caught a lot of flak from momentum investors, but the timing of going to the sidelines could not have been better. This stock's drop is another example of investors needing to adopt a sell strategy.

We are going to watch the name closely as there may be some short-term opportunities that develop over the course of time for the fertilizer sector in general. For now, we're going to see how the market handles the downward profit guidance.

Potash is not recommended at this time, holding a Dividend.com Rating of 3.1 out of 5 stars.

Weyerhaeuser Profit Warning and Dividend Cut Hammers Value Investors

Weyerhaeuser

(WY) - Get Report

announced it sees significantly lower than expected fourth quarter earnings and is also slashing its dividend payout to control costs.

Management of this paper and building products conglomerate cites the ongoing housing slump and a weak pulp market for its warning. The company is also cutting its quarterly dividend payout to 25 cents from 60 cents.

We have avoided shares of Weyerhaeuser since our early June coverage began, when the stock was trading at $58.23. The company will now have a dividend yield of 2.69%, based on the lowered payout and last night's closing stock price of $37.13.

This company has been another name that has been featured so often as a top value play, and today it is hitting investors that believed in the label extremely hard. We see technical support for the stock in the $23 to $24 area -- and would continue to avoid the shares at this current time.

Weyerhaeuser is not recommended at this time, holding a Dividend.com Rating of 2.7 out of 5 stars.

Cintas Withdraws 2009 Guidance

Cintas

(CTAS) - Get Report

announced that its second quarter profit dropped 13% to $71.8 million, or 47 cents per share, from $82.9 million, or 53 cents per share, a year ago.

The company's sales were up less than 1% as customer demand fell amid the economic slowdown that led to job cuts across corporate clients. The company also said it felt pressure from gasoline costs as well.

Management has decided to withdraw its 2009 earnings outlook. The consensus estimates are currently at $2.20 per share for the year on revenue of $4.09 billion.

We have avoided shares of Cintas since our early June coverage began, when the stock was trading at $28.12. The company has a 1.80% dividend yield, based on last night's closing stock price of $25.54. The stock does have some technical support in the $17 to $19 price area. We would avoid trying to catch a bottom here, and look elsewhere for better investment opportunities at this time.

Cintas is not recommended at this time, holding a Dividend.com Rating of 3.0 out of 5 stars.

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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.