Welcome to John Ransom's Stocks In The News, where the headline meets the trendline.
Stock number one is:
Pitney Bowes Inc., (SYMBOL PBI) and the headline says:
Pitney Bowes Cuts Dividend (Dow Jones Newswire)
Pitney Bowes, global provider of software and hardware products & services, announced disappointing first quarter earnings today. Declining mail use in America is harming the bottom line, and forcing the company to shift to lower-margin products and services.
The company slashed its dividend in half today, and guided full-year earnings estimates down as much as 20% year-over-year.
While Pitney Bowes remains a solidly profitable company with a good dividend and a low PE, the problem is that there is no proven growth plan in place. The stock reached ten-year lows in January, and is currently trading between $13 and $15.50. Investors should focus on companies with strong projected earnings growth.
Our Ransom Note trendline says: SELL PITNEY BOWES.
Stock number two is:
MeadWestvaco Corp., (SYMBOL: MWV) and the headline says:
MeadWestvaco profit falls 78% on higher costs (MarketWatch)
Global packaging company MeadWestvaco Corp. disappointed Wall Street with a big first quarter earnings miss due to higher costs. Additonally the company is lowering earnings guidance for the second quarter. Earnings came in at 16 cents per share vs. the expected 24 cents; however, revenues were strong.
MeadWestvaco announced cost reduction plans, including plans to sell a European business, and to refocus & streamline other operations. Earnings per share were previously expected to grow over 30% this year. Watch for some serious downward revisions.
The stock is in a trading range of $34 to $38. Shareholders should lower expectations now, and protect profits.
Our Ransom Note trendline says: STAY ON THE SIDELINES.
Stock number three is:
Starwood Hotels & Resorts Worldwide Inc., (SYMBOL: HOT) and the headline says:
Good Start to the Year (Citi Research)
Starwood Hotels reported first quarter earnings per share of 76 cents, handily beating the 53 cent consensus estimate, “driven by greater Bal Harbour residential sales and lower [expenses],” reports Citi Research. Starwood, operator of Sheraton and Westin hotel brands, plans to sell $3 billion of hotels, enhancing an already-large cash position. Investors should expect increased earnings estimates, additional share repurchases and dividend increases going forward.
Despite very slow projected earnings growth this year, the chart is bullish. We recommended a “trading buy” on Starwood shares on April 4, when the stock was at $61, and we still expect shares to retrace the previous high of $75 this year.
Our Ransom Note trendline says: STARWOOD HOTELS IS A TRADING BUY.