General Dynamics Beats View as Profit Rises 3%

Weapons and aerospace company General Dynamics ( GD) said Tuesday that its first-quarter profit rose 3% from the year-ago period, as strong sales of military equipment helped offset a decline in its Gulfstream jet business.

The Falls Church, Va.-based company reported fiscal first-quarter net income of $590 million, or $1.54 per share, up 3% from $572 million, or $1.43 per share, in the year-ago period. Revenue jumped 18% from the same quarter last year to $8.26 billion.

These results beat Wall Street analyst estimates for earnings of $1.46 per share on revenue of $7.82 billion.

Business Segment First-Quarter Breakdown

  • Profit jumped 33% to $163 million at GD's marine systems unit

  • Combat systems unit profit rose 8% to $279 million

  • Information technology earnings gained 11% to $289 million

  • Gulfstream profit fell 15% to $200 million

The company also said its backlog of orders rose 43% from the year-ago period, climbing to $71.1 billion.

General Dynamics shares rose $2.45, or +4.8%, in morning trading Wednesday.

We removed GD from our "Recommended" list back on Sept. 22, when shares were trading at $82.39. The company has a dividend yield of 3.00%, based on last night's closing stock price of $50.61.

The stock has technical support in the $41-$46 price area. If the shares can rebound here, we see overhead resistance around the $54-$60 levels. We would remain on the sidelines for now.

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

VF Corp Shares Hammered as Profit Sinks 33%

Shares of VF Corp ( VFC) were down nearly 12% in early trading, after the apparel maker reported first-quarter profit fell 33% to $100.4 million, or 91 cents per share, from $148.9 million, or $1.33 per share last year.

Sales fell 7% to $1.73 billion from $1.85 billion last year, as EPS came in three cents below expectations. Management blamed a stronger dollar, weak economic environment, as well as rising unemployment levels in the manufacturing and petrochemical sectors. This hurt sales in uniforms, which is routinely a high-margin business for the company.

VF lowered its 2009 EPS guidance to a range of $4.70-$5 per share, below its previous guidance for $5.42 per share.

We removed shares of VFC from our "Recommended" list back on Oct. 6, when the stock was trading at $72.41. The company has a 3.51% dividend yield, based on last night's closing stock price of $67.28.

The stock has technical support in the $51-$55 price area. If shares can firm up, we see overhead resistance around the $67-$68 mark. We would remain on the sidelines for now.

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

Aetna Pulls Back on Medical Care Costs

Shares of Aetna ( AET) were down nearly 8% in early trading, following first-quarter profit that was up 1% to $437.8 million, or 95 cents per share, compared with $431.6 million, or 85 cents per share, in the same quarter last year.

Sales rose 11% to $8.6 billion, beating EPS estimates. The EPS beat was partly helped by the company spending $277 million to repurchase more than 10 million shares in the quarter.

The company's medical costs spiked 14% to $5.8 billion, which management attributed to the impact of layoffs and membership increases from COBRA coverage.

The company did say it felt comfortable with 2009 EPS estimates of $3.85 to $3.95 per share. The consensus is for $3.85.

We have avoided shares of AET since our early June coverage began, when the stock was trading at $46.48. The company currently has a .16% dividend yield, based on last night's closing stock price of $24.40.

The company does have technical support in the $20 area, but if that fails we could see the $14-$15 mark.

If the stock can firm up here and begin to move higher, the $27-$30 level would be a key spot for overhead resistance. We would remain on the sidelines for now.

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

Time Warner Shares Rally on Results

Shares of Time Warner ( TWX) were up nearly 6% in early trading, after the media company reported first-quarter profit fell 14% to $661 million, or 55 cents per share, for the period ended March 31, down from the year-earlier result of $771 million, or 64 cents per share.

The company said revenue fell 7% to $6.95 billion from $7.47 billion, but EPS came in 8 cents ahead of consensus estimates. Publishing revenue fell 23% to $806 million, mostly on a 30% decline in ad sales.

Ad sales at AOL dropped 20%, while subscription revenue trailed 27%. DVD sales at its filmed entertainment division were down 7% to $2.6 billion.

Management expects 2009 earnings to be about the same as 2008. Current consensus estimates are for $1.96.

The company has a 1.15% dividend yield, based on last night's closing stock price of $21.77. The stock has technical support at the $18 level.

Shares are now trading sans the cable division, so it will be interesting to watch where the growth will come from. If the shares can build on this morning's early pop, we see overhead resistance around the $26-$27 price levels.

Time Warner is not recommended at this time, holding a Dividend.com DARS Rating of 3.2 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.