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Why PolyOne’s Shares Popped

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 PolyOne (NYSE: POL  ) jumped 10% today after announcing earnings and a big acquisition.  

So what: In the third quarter, revenue grew slightly to $740.2 million and earnings per share $0.33 on an adjusted basis. Revenue was short of estimates but earnings were slightly better than expected.

The other big news is the company's $246 million offer to buy Spartech (NYSE: SEH  ) . The company offered $2.67 per share in cash and 0.317 PolyOne shares for each Spartech share, which amounts to $8.47 per share at the current price.  

Now what: The acquisition will bring PolyOne into new markets and is viewed as a relatively good value. The company paid about 7.5 times trailing EBITDA and it is expected to add to earnings first quarter next year. The slow growth isn't enough to make me a buyer today, but we'll see next year if this and other acquisitions will jump-start PolyOne's growth.

Interested in more info on PolyOne? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDrawThe Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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Related Tickers

10/27/2016 1:12 PM
POL $29.33 Down -0.29 -0.98%
PolyOne CAPS Rating: *****
SEH.DL $0.00 Down +0.00 +0.00%
Spartech CAPS Rating: No stars