Why Blyth Shares Bounced

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 household-goods purveyor Blyth (NYSE: BTH  ) were soaring today, up as much as 24% after the company announced plans to spin off ViSalus, its weight-loss, energy drink, and nutritional supplement business, in an IPO worth $175 million.

So what: Blyth will retain ownership of more than half of ViSalus, which has been growing at a phenomenal pace. Sales over the first six months of the year totaled $327.3 million, up from $59.3 million the year before, while adjusted earnings nearly quadrupled to $36.9 million. For a company with a market cap near $700 million, those numbers are huge. Customer growth has been in line with sales for the direct-to-consumer subsidiary, and ViSalus has upped its sales and marketing team by four times in the past year.

Now what: Considering the jump in share price equated to about a $175 million increase in market cap, the same amount as the expected cash infusion, this gain seems fully deserved. If ViSalus can keep up even a fraction of the growth it's accomplished thus far, shareholders may be in store for one sweet ride.

Want to stay up to date on Blyth? Just add Blyth to your watchlist.

Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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