Time Warner Cuts 2008 Outlook as Ad Sales Slow

Time Warner

(TWX)

delivered an earnings report on Wednesday that saw mostly flat revenue and lower profits compared with the year-ago period.

The company posted earnings of $1.07 billion -- or 30 cents per share -- slightly lower than last year's third-quarter earnings of $1.09 billion -- or 29 cents per share.

The big news from the report came when Time Warner lowered its full-year outlook to $1.04 to $1.07 per share, down from previous estimates of $1.07 to $1.11 per share. These figures are still in line with analysts, who put earnings estimates at $1.06 per share.

We have been avoiding shares of TWX since we began our coverage in early June. Time Warner is a great brand, but the company has been hurt by a weakening economy and a sharply declining ad market. Advertising expenditures are expected to continue to drop for the foreseeable future, and that does not bode well for TWX's bottom line, which largely depends on ad sales for its offline and online media properties.

The risk/reward for this stock is flat at the moment, and the company's dividend yield is average, sitting at 2.31%, based on last night's closing price of $10.83. For the long term, TWX is a solid company, but investors may want to wait for pullbacks before jumping on these shares. Look at the recent price action of fellow media giant

News Corp.

(NWS) - Get Report

for evidence that TWX could fall still further before any rebound happens.

Time Warner is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.

Agrium Widens Its Earnings Forecast as Markets Remain Volatile

Agrium

(AGU)

just reported that its third-quarter profits grew more than sevenfold to $367 million, or $2.31, from $51 million, or 38 cents per share.

The company handily beat consensus EPS estimates by 42 cents, on the back of strength in emerging markets that have fueled a strong demand for food.

The weak global economic environment and pressured commodity markets is forcing management to widen its earnings guidance range for the second half of the year to between $3.30 and $4.00 per share.

We had removed the shares of AGU from our "Recommended" list back on Aug. 11 when the shares were trading at $74.63. The company has a very low dividend yield of 0.27%, based on last night's closing stock price of $40.22. The low yield and lower highs the company started to hit made us recognize a potentially big drop may have been ahead, so we fortunately made the proper adjustment to our list of best dividend stocks. The company is trading at just 6 times the low end of next year's estimates and is beginning to look better from a short-term investment angle. We'll keep investors posted if we spot an opportunity to own the name.

Agrium is not recommended at this time, holding a Dividend.com Rating of 2.9 out of 5 stars.

Polo Ralph Lauren Is Cautiously Optimistic

Polo Ralph Lauren

(RL) - Get Report

reported that second-quarter profit rose 40% to $161 million, or $1.58 per share, from $115.3 million, or $1.09 per share last year.

The company's revenue rose 10% to $1.43 billion, on the back of higher shipments of new products, as well as growth in global retail sales. Same-store sales rose 5.1%.

Management is reaffirming guidance, but it will be toward the low end of its previous guidance of $4 to $4.10 per share.

We had removed shares of Polo Ralph Lauren from our "Recommended" list back on Sept. 17, when shares were trading at $49.51. The company has a dividend yield of 0.40%, based on last night's closing stock price of $49.51. The company is trading at a reasonable 13 times 2009's low end of EPS estimates, but recent consumer shopping stats may need us to ratchet down those expectations. We will keep an eye on this top brand and see if there is an opportunity at some point. For now, we would be cautious in any perceived luxury-spending-focused stock.

Polo Ralph Lauren is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.

Duke Energy Earnings Fall Well Short of Expectations

Duke Energy

(DUK) - Get Report

reported that its third quarter earnings badly missed analyst estimates due to milder than expected weather and storm-related outages in the Midwest.

The company's net income dropped 65% from the year-ago period, while revenue came in at $3.51 billion, vs. analyst estimates of $3.94 billion.

Chairman, President and Chief Executive Officer James E. Rogers said he was "disappointed" with the results, but that the company's "strong performance earlier in the year will help mitigate

their impact."

We've been recommending this stock since Oct. 23, when it was trading at $15.45 per share. DUK currently has a 5.44% dividend yield, based on last night's closing price of $16.92.

Certainly, this earnings report from Duke Energy was not a good one. However, we're still comfortable with the company's valuation, which sits at 14 times next year's low-end estimates. The stock's 5% plus dividend yield is attractive, and the risk/reward is reasonable. This energy company -- one of the nation's largest -- is well-positioned in the current economic environment, and we will continue to recommend the name to long-term investors unless its fundamentals change dramatically.

Duke Energy is a recommended dividend stock, holding a Dividend.com Rating of 3.5 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.