ITC Holdings Shares Jumped Temporarily: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ITC Holdings (NYSE: ITC  ) soared as much as 11% in early trading before closing up 3%. The operator of power distribution systems announced plans to purchase Entergy's (NYSE: ETR  ) transmission business for $1.78 billion.

So what: Initial enthusiasm faded after investors realized the full price of the deal. Reuters reports that Entergy's transmission business is already the subject of a Department of Justice investigation and will need $2 billion in investment over the next four to five years.

Now what: In the here and now, ITC announced a plan to pay out a $700 million one-time dividend to shareholders ahead of the deal. Management also said it expects $3.90 to $4.05 in per-share profit for 2012. Analysts were calling for $4.03 a share. Do either of these moves matter? Would you buy shares of ITC Holdings at current prices? Please weigh in using the comments box below.

Interested in more information about ITC Holdings? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Motley Fool newsletter services have recommended buying shares of ITC Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 06, 2011, at 2:31 PM, settlenever wrote:

    The need to invest $2B is not negative - depending upon the returns in the approved regulatory rates, the ability to grow the utility's rate base may be accretive to shareholder value.

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