Staples Will Be Best House on a Bad Street

Staples ( SPLS) reported that it will meet or beat quarterly earnings estimates in its next report.

The world's largest office supplier says it will delay new store openings in the weak U.S. economy. The current plan is to open 75 units in North America next year, which would be significantly down from 110 slated for this year.

The office-supply sector has been ravaged this year, with both Office Depot ( ODP) and OfficeMax ( OMX) dropping below the $5 per share level.

We have avoided shares of Staples since our early June coverage began and the stock price was at $23.23. The company currently has a 2.07% dividend yield. We think it can come out of the downturn positioned well, but for now, we don't think the downturn in the sector is over. Shares were at $8.50 in 2002, and that is where the biggest support level is for the stock if a further breakdown occurs. We would look elsewhere for now.

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

IGT Profit Misses Estimates, but It Sees a Catalyst at the End of 2009

International Game Technology ( IGT) just reported a 57% drop in quarterly net profit to $52.1 million -- 3 cents below consensus EPS estimates.

The casino gaming-equipment maker cited lower slot play levels and continued shifts in installed base mix to include more lower-yielding, stand-alone lease and central determination machines, as part of the reason for the 5% drop in revenue this past quarter.

The one bright spot that the company sees is the introduction of server-based technology at the end of 2009, which they believe can kick-start the technology-driven replacement cycle. The company sees next quarter's profits at the low end or slightly below its targeted range of 30 to 35 cents a share.

We had removed shares of IGT from our "Recommended" list on Aug. 19, when the stock traded at $22.81. The company has a 4.61% dividend yield, based on last night's closing stock price of $12.57. The casino industry is going through some rough patches right now, but when it stabilizes, IGT should be a name that investors warm up to. We'll keep everyone posted if we see any signs of a solid bottom forming.

International Game Technology is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.

Equity Residential Beats Estimates, Sees Job Losses Ahead

Equity Residential ( EQR) just reported that its third-quarter funds from operations rose 10% to $189.1 million. The results came in 2 cents ahead of the consensus estimates.

The REIT's management said its markets are currently experiencing significant headwinds due to the slowing economy, and sees resulting job losses in the fourth quarter, which will cause property fundamentals to further weaken in 2009.

As for the next quarter, the company sees FFO (funds from operations) in the range of 60 cents to 65 cents per share, which surrounds the average forecast of 62 cents per share.

We had recently removed shares of EQR from our "Recommended" list on Oct. 15, when the stock was trading at $35.91. The company now has a 6.04% dividend yield, based on last night's closing stock price of $31.93. We are watching this name closely, as the stock has some support at the $29-$30 level, but if that does not hold, then $20 is the next support level. It's a great name to own once the fundamentals solidify. We'll keep investors posted.

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

Avon Products Revenue Rises, but North American Sales Drop

Avon Products ( AVP) just reported that its third-quarter revenue rose 13% to $2.6 billion.

The company did however miss EPS estimates by 7 cents as North American sales slowed. The company lowered its full-year operating margin growth view to 13% from a previous level of 14% as well. The weakness in North America put a damper on impressive international sales growth, which was up 25% in its Latin America market and 25% in China.

The company is also expecting the recent strength in the U.S. dollar to hurt fourth-quarter and full-year growth rates and operating margins.

We had removed shares of AVP from our "Recommended" list on Oct. 2, when shares traded at $41.23. The company has a 3% dividend yield, based on last night's closing stock price of $26.67. The company appears to have technical support at the $20-$21 level. If that fails to hold, then you will likely see the midteens for the stock. We will be watching the shares here and would wait for some sort of stabilization before considering any ratings upgrade.

Avon Products is not recommended at this time, holding a Dividend.com Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks as well as a detailed explanation of our ratings system.

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.

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