Dividend.com: Strong Family Dollar

Family Dollar Raises Guidance

Shares of Family Dollar Stores ( FDO) were up nearly 10% in early trading, after the discount retailer reported sales for the second quarter ended Feb. 28, increased 8.7% to approximately $2 billion compared with $1.8 billion for the second quarter ended March 1, 2008.

Looking ahead, management now expects earnings for the second quarter of fiscal 2009 will be between 59 cents and 61 cents per diluted share, above the consensus estimates of 50 cents per share.

We had removed shares of Family Dollar from our "Recommended" list on Feb. 5, when the stock was trading at $28.31.The company does have technical support in the $22 to $23 area and we are looking for a potential move up to the $34 to $35 level before it encounters any resistance.

We may need to re-examine our stance on the stock. We had some concerns after Dollar Tree's ( DLTR) warning.

Family Dollar Stores is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.

PetSmart Profit Rises 4% in the Fourth Quarter

Shares of PetSmart ( PETM) were down over 7% in early trading, after the pet retailer reported fourth quarter profit rose 4% to $78.4 million, or 62 cents per share, compared to $75.4 million, or 59 cents per share in the year-ago period.

Revenue was up 2%, to $1.36 billion from $1.33 billion, as same-store sales increased 3%.

Looking ahead, management expects a profit of $1.40 to $1.50 per share for the fiscal year ending in 2010, which is below the $1.48 per share consensus estimates.

We had removed shares of PetSmart from our "Recommended" list back on Sept. 17, when the stock traded at $26.60. The company has a dividend yield of 0.65%, based on last night's closing stock price of $18.51.

The stock has technical support at the $12 to $13 price levels. If the shares can rebound from today's drop, we see overhead resistance around the $21 to $22 range. We would remain on the sidelines for now.

PetSmart is not recommended at this time, holding a Dividend.com Rating of 3.1 out of 5 stars.

Adobe Bumps Up EPS Guidance for the First Quarter

Shares of Adobe Systems ( ADBE) are up nearly 10% in early trading, after the software company said it expects to beat first-quarter earnings expectations, citing its cost-cutting results.

Management now expects first-quarter EPS to be in the 44 cents to 45 cents price range, above the consensus estimates of 41 cents. That said, the company does see revenue coming in a bit below expectations. Weak sales for its new line of programs for creative professionals, as well as lackluster sales of a recent upgrade to its Acrobat document imaging programs.

Shares have been cut more than in half since hitting 52-week highs of $44 a share in May. If the stock does continue to weaken, the next major level of technical support is near the $13 to $15 level. If the shares can firm up and move higher, we see overhead resistance at the $27 to $30 levels. We do not currently rate this non-dividend paying stock, but do follow the name closely.

General Dynamics Cuts Forecast, Plans Layoffs

Shares of General Dynamics ( GD) were down more than 3% in early trading, after the company announced it was laying off 1,200 workers as it cuts back its business-jet production.

The company also announced it is cutting its 2009 earnings outlook to $6 to $6.10 a share, from a prior estimate of $6.70 to $6.75 a share. Tough news considering management had just reaffirmed guidance on Jan. 28.

Action Alerts PLUS

We had removed General Dynamics from our "Recommended" list back on Sept. 22, when shares were trading at $82.39. The company has a dividend yield of 3.78%, based on last night's closing stock price of $40.22. The stock has technical support in the $30 to $33 price area. If the shares can rebound here, we see overhead resistance around the $48 to $50 levels. We would remain on the sidelines for now.

General Dynamics is not recommended at this time, holding a Dividend.com Rating of 3.2 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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