Genworth Financial Buys Small Bank to Access TARP Funds
announced late Sunday that it would it apply for capital under a U.S. government program, after reaching a deal to buy a bank.
The company has reached an agreement in principle to buy InterBank fsb of Maple Grove, Minnesota -- a community bank with about $1 billion in assets -- and filed a savings and loan holding company application with the Office of Thrift Supervision, a federal regulator.
This deal follows
similar small bank acquisition, which employs the tactic of spending relatively little cash in order to access billions from the TARP program. 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.
Genworth Financial recently stopped paying a dividend.
Covidien Lowers Previous Guidance Numbers
reported profits rose 12-fold to $409 million, or 81 cents per share, compared with profit of $34 million, or 7 cents per share a year prior. In the prior year, a hefty charge for discontinued operations cut into profit.
Medical device revenue, which is the company's largest segment, rose 10% to $1.7 billion. Sales of imaging solutions products rose 3% to $300 million. Medical supplies sales rose 10% to $245 million and pharmaceutical product sales rose 37% to $296 million.
As for the company's outlook, it now sees sales in fiscal 2009 to be flat to up 3% due to the impact of the rapidly rising U.S. dollar. This is below the company's September forecast for a rise of 5% to 8% for 2009 sales.
We had removed shares of Covidien from our "Recommended" list back on Oct. 6, when the shares traded at $52.19. The company has a dividend yield of 1.68%, based on Friday's closing stock price of $38.10. The stock is trading at 15 times the low end of 2009 EPS estimates. We think the stock is fairly valued here, and the stock offers a flat risk/reward opportunity.
Covidien is not recommended at this time, holding a Dividend.com Rating of 3.0 out of 5 stars.
Lowe's Attempts to Bounce After Dismal Report
just reported its profits fell 24% to $488 million, or 33 cents per share. That's down from $643 million, or 43 cents per share, a year ago.
The company said its revenue budged up 1.4% to $11.73 billion, up from $11.57 billion last year. Same-store sales during the quarter fell 5.9%.
The company continues to feel the fallout of the U.S. housing slump and tight credit curtailing demand for home improvement projects and big-ticket goods such as appliances.
As for the outlook, the company sees fourth-quarter profits coming in between 8 cents and 16 cents per share, below the 18 cents the analysts had been expecting. For 2009, the company sees a profit between $1.46 and $1.54 per share, surrounding the consensus of $1.51 per share.
We had removed the shares of Lowe's from our "Recommended" list back on Sept. 17 at $24.40 a share, after recommending the stock on Aug. 8, when it was trading at $20.94. We felt the bottom it had put in was nothing more than a head-fake. The company has a dividend yield of 1.76%, based on Friday's closing stock price of $18.23. The $15 price area seems to be a critical area of support. We do prefer
in the space, but at this time, neither one seems to warrant much investor dollars. We'd look elsewhere for better opportunities.
Lowe's is not recommended at this time, holding a Dividend.com Rating of 3.1 out of 5 stars.
Target's Profits Fall 24%, Suspends Share Buybacks
just reported that its fourth quarter profits fell 24% to $369 million, or 49 cents per share, from $483 million, or 56 cents per share, last year.
The company missed on its revenues coming in at $15.11 billion, below the $15.24 billion analysts expected. Same-store sales fell 3.3% during the quarter.
A downer for the company in the quarter was the 83% drop in its credit card business to $35 million from $202 million last year. The company pointed to higher bad-debt expenses and lower interest rates.
The company also announced it would temporarily suspend nearly all of its share buybacks and cut capital spending to help protect its debt ratings.
We have been avoiding the shares of Target since our early June coverage began and the stock was trading at $52.52. The company has a dividend yield of 1.70%, based on Friday's closing stock price of $33.03. If the market can stabilize, the company does have the potential of doing a real-estate spin-off that can derive greater value in the company. We'll keep an eye on that news and see if that starts to gain some traction. In the meantime, the stock has potential downside risk to the 2000 levels of $23 to $24 a share. We'd remain on the sidelines for now.
Target is not recommended at this time, holding a Dividend.com Rating of 3.2 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.