Starwood Hotels Profit Drops 12% as 2009 Estimates Lowered

Starwood Hotels & Resorts Worldwide ( HOT) just reported a 12% drop in its third-quarter profit.

The company said its revenue from vacation ownership and residential sales declined 11%. Systemwide revenue per available room, or revpar, for same-store hotels in North America dipped 0.5%.

Management warned that 2009 will likely include softening worldwide revpar and continued weakness in its vacation ownership division. The company said it will look to offset some of these factors by lowering vacation ownership, hotel, and corporate overhead costs.

As for the company's outlook, it now sees 2009 profit of about $1.55 per share, which is significantly below analyst expectations of $1.98 per share.

We had removed HOT from our "Recommended" list back on Aug.19, when shares traded at $39.01. The company has a dividend yield of 4.69%, based on last night's closing stock price of $19.20. The stock may see a short-term bottom after its recent 50% drop, but the long-term outlook still puts the stock at 14 times 2009 estimates, with uncertain revenue growth projections. Unfortunately, a cheaper stock price doesn't necessarily mean a solid value at this point. We would look for better risk/reward opportunities elsewhere.

Starwood Hotels is not recommended at this time, holding a Rating of 3.2 out of 5 stars.

Dow Chemical Beats Earnings Estimates, Says Dividend Still 'Safe'

Dow Chemical ( DOW) reported a 6% increase in its third-quarter profits after it implemented substantial price hikes.

The company reported a sales increase of 13% to $15.4 billion and EPS that came in 3 cents ahead of estimates.