Charles Schwab Profit Falls 29%, but Still Beats View

Charles Schwab ( SCHW) said early Wednesday that its first-quarter profit fell 29% from the same quarter in the previous year.

The San Francisco-based company said its first-quarter profit fell to $218 million, or 19 cents per share, compared with $305 million, or 26 cents per share, in the year-ago period.

Total net revenue for the quarter fell to $1.11 billion from $1.31 billion in 2008.

On average, Wall Street analysts expected a profit of 15 cents per share on revenue of $1.07 billion.

Schwab said that the latest quarterly results include a $26 million pre-tax gain from a debt repurchase, $14 million in pre-tax net impairment losses, and $59 million in pre-tax charges for severance and additional costs relating to expense reduction measures.

Schwab shares rose 69 cents, or 4.28%, in early afternoon trading Wednesday.

We had removed shares of SCHW from our "Recommended" list on Sept. 15, when they traded at $22.70. The company has a dividend yield of 1.79%, based on Friday's closing stock price of $13.39. The stock does have technical support in the $12-$13 price area. If the shares can stabilize and resume their recent momentum, we see overhead resistance around the $18-$19 levels. We would remain on the sidelines for now.

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

Abbott Labs Beats Estimates, Issues In-line Guidance

Abbott Laboratories ( ABT) said Wednesday that its first-quarter profit beat Wall Street estimates, helped by one-time items.

The Chicago-based health care products company said its fiscal first-quarter profit came in at $1.44 billion, or 92 cents per share, compared with $938 million, or 60 cents per share, in the year-ago period. This profit was aided by a couple of one-time items, namely, a $797 million gain related to derecognition of a contingent liability, and some contractual payments from longtime partner Takeda Pharmaceutical of Japan.

Excluding these special one-time items, the company earned 73 cents per share. On average, Wall Street analysts expected earnings of 70 cents per share.

Global sales edged down slightly to $6.72 billion in the quarter, falling below analyst estimates of $7.07 billion. Abbott cited a stronger dollar as a reason for the downturn.

Abbott reaffirmed its full-year 2009 earnings forecast of $3.65 to $3.70 per share, excluding special items. For the fiscal second quarter, the company expects profits of 87 cents to 89 cents per share.

Abbott shares fell $2.16, or 4.83%, in late-morning trading Wednesday.

We had removed the shares from our "Recommended" list on Oct. 9, when the stock was trading at $55.29. The dividend yield is 2.93%, based on last night's closing price of $49.20. The stock has technical support in the $37-$38 price area. If it can firm up here, we see overhead resistance in the $55-$57 range. We would stay on the sidelines for now.

Abbott Labs is not recommended at this time, holding a Dividend.com DARS Rating of 3.4 out of 5 stars.

SkyWest Lowers Profit Forecast; Shares Fall

Airline operator SkyWest ( SKYW) lowered its first-quarter profit forecast Wednesday, citing flight groundings and writedowns as the main factors it expects to negatively affect results.

The St. George, Utah-based company, which operates SkyWest Airlines and Atlantic Southeast Airlines, said that it now expects a fiscal first-quarter profit of between $4.5 million and $7.5 million, or 8 cents per share to 13 cents per share.

On average, Wall Street analysts expect a profit of 34 cents per share.

SkyWest said that a higher-than-usual number of flight cancellations in Atlanta led to a $7.5 million pre-tax charge, and the company was forced to take a $7 million writedown because of a decline in certain marketable securities. SkyWest is slated to release its first-quarter earnings report on May 6.

SkyWest shares fell $1.81, or 12.25%, in late-morning trading Wednesday.

We have avoided shares of SKYW since our early June coverage began, when the stock was trading at $15.87. The stock has technical support in the $10 price area. If the shares can firm up, we see overhead resistance around the $20 price level. We would remain on the sidelines for now.

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

Trading Follow-Up From Yesterday's Ideas

Check out some thoughts on yesterday's trading ideas.

I see AutoZone ( AZO) hit the $160 level at which I said to keep your stops in, so that trade was pretty much a dud (loss should not have been more than $2 for anyone who gave it a taste). Traders could have taken a $3 profit at $155, but I felt there could have been more downside. Losing is part of the trading game.

As for the UltraShort Financials ProShares ( SKF), traders should keep the stops around the $66 price spot, so you can preserve a nice profit if you nibbled in the low $60s. The play hit $71 earlier, and I would look to peel the bulk of the trade off in the high $60s-low$70s if it heads back up. For the rest of the position I would move the stop up if the stock keeps rising.

Also, the UltraShort Real Estate ProShares ( SRS) spiked above $37 earlier today but has pulled back a bit. So what I would do now is keep the $35 price area as my stop to protect my profits. If the shares move up, I would move the stop up as well. This would still allow for a nice profit.
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.