Brown-Forman Cuts 2009 View, Shares Drop

Wine and liquor maker Brown-Forman ( BFB) reported better-than-expected fiscal third-quarter profit Tuesday, but its shares retreated after the company cut its 2009 profit view.

The Louisville, Ky.-based company said its third-quarter net income was $123.4 million, or 81 cents per share, up from $116 million, or 75 cents per share, in the year-ago period. Net sales fell around 11% to $784.1 million, hampered by the strengthening U.S. dollar, which hurts margins on overseas sales.

On average, Wall Street analysts expected net income of 77 cents per share.

Brown-Forman, which produces famous liquor brands Jack Daniels and Southern Comfort, lowered its full-year 2009 EPS estimates to $2.70 to $2.90, down from a previous forecast of $3 to $3.20. This news sent the company's shares down more than 8% in early trading Tuesday.

We removed shares of Brown-Forman from our "Recommended" list on Aug. 28, when the shares traded at $77.02. The company has a 2.8% dividend yield, based on last night's closing stock price of $41.06.

The $39 levels seems to be a key area the stock needs to hold short term, but if that fails, then the $30 to $31 range is likely. If the shares can rebound, we see overhead resistance in the $45 to $48 price range.

Brown-Forman is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.

Kroger Shares Rise on Fourth-Quarter Earnings Beat

Kroger ( KR), the largest supermarket chain in America, said Tuesday that its fourth-quarter profit rose 8% from the previous year.

The company reported fiscal fourth-quarter net income of $349.2 million, or 53 cents per share, up from $322.9 million, or 48 cents per share, in the year-ago period. Total sales revenue was mostly flat, edging slightly to $17.26 billion from $17.23 billion.

On average, Wall Street analysts expected fourth-quarter profit of 51 cents per share on revenue of $18.3 billion.

Kroger said that same-store sales -- considered a key indicator of a retailer's health -- rose 3.8% from the previous year. Same-store sales measure the performance of stores open at least five fiscal quarters.

The company also said that 27% of its grocery revenue originated from its own Kroger-branded products, which are normally priced lower than comparable name-brand items.

Kroger said it expects same-store sales to rise between 3% and 4% for 2009, and sees full-year 2009 profit of $2 to $2.05 per share. Shares of Kroger were up $1.50, or 7.7%, in early trading Tuesday.

We have avoided shares of Kroger since our early June coverage began, when the stock was trading at $27.30. The company has a 1.85% dividend yield, based on last night's closing stock price of $19.46. The shares have technical support in the $18 to $20 range. If those levels fail to hold, then the $13 to $15 support area could possibly be the next stop. If the shares can continue today's momentum, we see overhead resistance around the $24 price mark. We would remain on the sidelines.

Kroger is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.

Citigroup Shares Rally Above $1 on CEO Comments

In an increasingly rare piece of good news coming out of the banking industry, Citigroup ( C) CEO Vikram Pandit said in an internal memo Monday that the company operated at a profit for the first two months of 2009.

Pandit said that the embattled banking company had an operating profit, before taxes and special items, of $8.3 billion for the first two months of 2009. Pandit declined to say, however, how much credit losses and other one-time items would offset its earnings.

Citigroup shares rose 25 cents, or about 25%, in early trading Tuesday. The company's stock has lost more than 93% of its value in the past year, amid the worst banking crisis in U.S. history.

Tough to get too excited about a $1 stock as the market seems to be so far today. Remember, Mr. Pandit thought the stock was "good" when he bought 850,000 shares of stock in the $8.92 to $15.15 per share price range, back in November. Rather than bottom-fish here, we would look elsewhere for better investment opportunities.

Citigroup is not recommended at this time, holding a Dividend.com Rating of 2.3 out of 5 stars.

Dick's Sporting Goods Posts $104 Million Fourth-Quarter Loss on Acquisition Charges

Dick's Sporting Goods ( DKS) reported a fiscal fourth quarter loss on Tuesday, its results hampered by charges related to its February 2007 acquisition of Golf Galaxy.

Dick's reported a fourth-quarter loss of $104.4 million, or 93 cents per share, compared with a profit of $73.2 million, or 62 cents per share, in the year-ago period. These results included an impairment charge of $1.44 per share. Excluding this charge and acquisition write-down costs, the company would have seen a profit of $63.4 million, or 55 cents per share.

Quarterly sales fell a little less than 1% in the period to $1.21 billion.

On average, Wall Street analysts expected earnings of 53 cents per share on revenue of $1.23 billion.

Same-store sales at Dick's stores, considered a key indicator of a retailer's health, fell 8.6% from the year-ago period.

For the full year 2008, Dick's posted a loss of $35.1 million, or 31 cents per share, compared with a profit of $155 million, or $1.33 per share, in 2007. Excluding one-time items, the company would have seen a profit of $138.9 million, or $1.19 per share.

Full-year jumped rose 6% to $4.13 billion from $3.89 billion, aided by new store openings and the company's November 2007 acquisition of Chick's Sporting Goods.

On average, Wall Street analysts were expecting full-year earnings of $1.15 per share on revenue of $4.16 billion, excluding special items.

Dick's offered lower-than-expected fiscal first-quarter guidance, forecasting earnings of 6 cents per share. Excluding one-time items, the company said it expects adjusted profit of 3 cents to 8 cents per share.

On average, Wall Street analysts expected a first-quarter profit of 10 cents per share, excluding special items.

The company is down near some near-term technical support of $9. If that fails to hold, the company may need to test the $5.50 level, not seen since its late 2002 IPO. If the shares can continue today's rebound, we see the $15 to $16 as initial overhead resistance. We would prefer to look at shares of Nike ( NKE) for investment exposure in the sporting goods part of the market. We do not have Nike on our "Recommended" list at the moment, but it is a name we like if the markets can stabilize.

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.