Acuity Brands Earnings Fall, Will Cut Jobs

Lighting equipment maker Acuity Brands ( AYI) just reported profit for the fiscal fourth quarter that fell 19% amid rising costs and weak demand in the residential housing market.

The company sees a decrease in U.S. construction spending as a result of weak economic conditions and tighter lending requirements. The recent spike in commodities prices -- particularly steel -- is likely to pressure its margins as well.

Acuity also announced a reduction in its workforce that will encompass about 800 personnel -- including both manufacturing positions and salaried positions in mostly non-customer interfacing areas of the business.

This is yet another company that is beginning to look cheaper from a valuation standpoint at nearly 10 times this year's earnings. The company's dividend of 1.41% -- based on last night's closing stock price of $36.81 -- is a bit low. We would again like to see the company build some support at these levels before we reconsider our ratings.

Acuity Brands is not recommended at this time, holding a Dividend.com rating of 2.9 out of 5 stars.

Corning Reaffirms on Data Through August

Corning ( GLW), has reaffirmed guidance that it previously lowered in September -- which was for EPS to be in a range of 43 cents to 45 cents.

The company did say it would cut capital spending in 2008 and 2009. The company also has stopped outside hiring and may curtail production capacity because of spreading economic worries.

It appears that the reaffirming freeze is over -- and Corning is back to reassuring investors that the quarter will be fine. The big concern we have is that the guidance is based on data the company has compiled only through August. We would like to know how September ended up, but we'll likely have to wait until the company reports. We would hold off on these shares for now, until we get more clarity on the company's efforts to control costs. The company has a dividend yield of 1.43% -- based on last night's closing stock price of $22.61.

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

Illinois Tool Works Takes Down Estimates

Illinois Tool Works ( ITW) is giving investors some tough news this morning as the company is lowering its third-quarter and full-year forecasts.

The company experienced a slowdown in North America during the month of September -- as industrial production and end market fundamentals weakened in the month. Margins also compressed -- in part due to the more difficult environment to recover raw-material price increases.

As for the outlook, the company now sees earnings from continuing operations between $3.22 per share and $3.34 per share -- which is below their earlier forecast of $3.40 to $3.52 a share.

We have avoided the shares of ITW since early our coverage initiated in early June, when shares were trading at the $50 level. However, the company's valuation of 12 times earnings and a dividend yield of 3.17% -- based on last night's closing stock price of $50.16 -- is starting to make the stock look better. We'd like to see the shares hold these levels for a bit before considering any ratings upgrade.

Illinois Tool Works is not recommended at this time, holding a Dividend.com rating of 3.3 out of 5 stars.

Safeway Reports In-Line Quarter

Food and drug retailer Safeway ( SWY) just reported net income of $199.7 million -- or 46 cents per diluted share for its third-quarter results.

The company's sales increased 3.9% to $10.2 billion -- and its same-store sales increased 2.8% including fuel and 0.5%, excluding fuel.

The company is reaffirming guidance for 2008 of $2.25 to $2.35 diluted earnings per share, free cash flow of $500 million to $700 million and identical-store sales growth -- excluding fuel -- of 1.0% to 2.0%.

Safeway is trading at 10 times 2008 earnings estimates, which is fairly attractive. However, we have been avoiding the stock since our early June coverage began, when shares were trading at the $31 level. The dividend yield of 1.29% -- based on last night's closing stock price of $21.77 -- is fairly low, and we would hold off on the shares for now.

Safeway is not recommended at this time, holding a Dividend.com rating of 2.8 out of 5 stars.
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.