February 12, 2013
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 equipment maker Rexnord (NYSE: RXN ) jumped 11% at the open today after hiring Goldman Sachs to review options for the company. Shares settled at nearly a 4% gain at market close.
So what: Goldman Sachs has been hired to pursue options, including a sale of the whole company or just pieces of the business. The motion-control and water-management businesses may attract strategic buyers willing to pay a premium for their businesses.
Now what: There's no concrete news about sales today, so that's why shares settled lower as the day went on. I wouldn't change your investment thesis completely because there's a good possibility that nothing comes of this move at all. The stock trades at 18 times forward earnings, and earnings growth is expected to be about 20% next year. That's not a cheap stock, and given its low revenue growth, I'm staying away from the speculation today.
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