Eastman Chemical Shares Skyrocket on First-Quarter Adjusted Earnings Beat

Eastman Chemical ( EMN) said Thursday that its first-quarter profit fell a whopping 98%, but its adjusted earnings still beat analyst estimates and sent the company's shares soaring.

The Kingsport, Tenn., company reported fiscal first-quarter net income of $2 million or 3 cents per share, down 98% from $133 million or $1.68 per share in the year-ago period. These results were hurt by one-time items, including restructuring charges.

Excluding these and other one-time items, the company earned 25 cents per share, enough to beat the average Wall Street analyst estimate of 14 cents per share. Sales for the quarter dropped 35% percent to $1.13 billion, well shy of the average analyst forecast of $1.33 billion.

Eastman also reaffirmed its full-year 2009 profit forecast of $2 to $3 per share. On average, Wall Street analysts expect $2.29 per share. Eastman shares rose $7 or 20% on the heels of the report in late morning trading Friday.

We removed Eastman from our "Recommended" list back on Sept. 4 when the stock was trading at $57.56. The company has a 5.32% dividend yield based on Friday's closing stock price of $33.11.

The stock has technical support in the $31 to $33 price area. If the shares can continue today's run-up, we see overhead resistance in the $42 to $46 price area. We would remain on the sidelines for now. Eastman holds a Dividend.com DARS Rating of 3.1 out of 5 stars.

Honeywell Slashes Full-Year Forecast after First-Quarter Profit Falls 38%

Diversified technology and manufacturing company Honeywell ( HON) said Friday that its first-quarter profits sank as the economic recession hit the company harder than it had anticipated.

The Morristown, N.J., company reported fiscal first-quarter net income of $397 million or 54 cents per share, down 38% from $643 million or 85 cents per share in the year-ago period. Overall sales fell 14.6% to $7.57 billion.

These results matched Wall Street estimates of 54 cents per share on revenue of $7.53 billion.

The company posted lower sales at many of its units, including a 41% sales drop in its transportation division, which makes auto equipment; a 6% sales drop in its commercial and residential buildings products unit, which makes temperature control systems; and a 9% drop in sales for its aviation unit, which makes radars and other aircraft gear.

As a result of worse-than-expected economic conditions, Honeywell lowered its full-year 2009 forecast and now expects earnings of $2.85 per share to $3.20 per share, down 35 cents from its previous estimate. On average, Wall Street analysts expect $3.03 per share.

For the second quarter, the company said it sees earnings of 55 cents per share to 65 cents per share on sales of $7.4 billion to $8.1 billion, well below analyst expectations for 73 cents per share on sales of $8.33 billion. Honeywell shares fell $1.38 or 4.2% in Friday morning trading.

We removed Honeywell from our "Recommended" list back on Aug. 21, when the stock was trading at $48.49. The company has a 3.23% dividend yield based on Friday's closing stock price of $32.38.

Technically, we are watching the $23 to $26 price area for the next level of support if the stock continues to drop on today's earnings news. If the shares can stabilize and begin to move higher, we see overhead resistance around the $35 to $36 price levels. We would remain on the sidelines for now. Honeywell holds a Dividend.com DARS Rating of 3.4 out of 5 stars.

Hurt by Investment Losses, Chubb First-Quarter Profit Falls 48%

Insurance holding company Chubb ( CB) saw its first-quarter profits fall more than 48% year over year, hurt by investment losses and lower policy sales.

The Warren, N.J., company reported fiscal first-quarter net income of $341 million or 95 cents per share, compared with $664 million or $1.77 per share in the year-ago period. Chubb's operating earnings fell to $1.43 per share. On average, Wall Street analysts expected profits of $1.38 per share excluding one-time items.

Pretax investment losses totaled $266 million for the quarter, mostly related to underperforming investments in private equity and hedge funds. Net written premiums fell by 7% to $2.7 billion in the quarter.

The company also said that net written premiums under review fell 7% to $2.74 billion from $2.94 billion in the year-ago quarter, while its "combined ratio" jumped to 88.1% from 83.9%. An insurer's combine ratio refers to how much money insurers spend in relation to every dollar of premium business; the lower the combined ratio, the more profitable the business.

Chubb shares rose 55 cents or 1.33%, in morning trading Friday.

We had removed Chubb from our "Recommended" list on Jan. 9 when the stock was trading at $46.42. We originally had the shares on the list at a share price of $50.32. The company has a 3.46% dividend yield based on last night's closing stock price of $40.46.

The stock has technical support in the $35 price area. If the shares can firm up here, we see overhead resistance around the $45 to $46 price levels. We would remain on the sidelines for now. Chubb holds a Dividend.com DARS Rating of 3.2 out of 5 stars.

Microsoft Posts First-Ever Year-Over-Year Revenue Decline

King of the software world Microsoft ( MSFT) reported late Thursday its first-ever year-over-year revenue decline, but its shares rallied Friday as adjusted earnings met analyst expectations.

The Redmond, Wash., company reported fiscal first-quarter net income of $2.98 billion or 33 cents per share, down 32% from $4.39 billion or 47 cents per share in the year-ago period. These results included $290 million in severance charges from layoffs as well as $420 million in investment write-downs.

Excluding those and other special one-time items, Microsoft said it would have profited 39 cents per share, which matched the average Wall Street analyst estimate. Revenue, however, fell by 6% percent to $13.6 billion, missing analyst expectations of $14.1 billion.

This year-over-year decline in quarterly revenue was the first in the company's 23 years as a publicly traded company. Microsoft declined to offer full-year 2009 guidance and said that it is not optimistic about any sort of recovery in the current quarter. Shares gained $1.55 or 8% in early Friday afternoon trading.

We removed Microsoft from our "Recommended" list on Oct. 6 when shares traded at $26.32. The company has a 2.75% dividend yield based on last night's closing stock price of $18.92.

The stock has long-term technical support in the $16 price area, but faces overhead resistance at the $23 to $25 levels. We would remain on the sidelines for now. The stock holds a Dividend.com DARS Rating of 3.4 out of 5 stars.
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.