Why Measurement Specialties Inc. Shares Popped Today

Is Measurement Specialties' jump meaningful or just another movement?

Jun 19, 2014 at 4:45PM

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 Measurement Specialties (NASDAQ:MEAS) jumped nearly 11% Thursday after the sensor manufacturer announced it has agreed to be acquired by TE Connectivity (NYSE:TEL).

So what: TE Connectivity will acquire Measurement Specialties for $86 per share in cash, or a roughly 10% premium to yesterday's close. Including the assumption of debt, the total deal is valued at approximately $1.7 billion.

TE Connectivity CEO Tom Lynch said in a press release, "The acquisition of Measurement Specialties is a key part of our strategy to be a leader in the very attractive, high-growth sensor industry and adds nearly $40 billion to our addressable market."

Now what: Measurement Specialties is indeed growing nicely as its core market remains strong. This fiscal year, revenue is
projected to increase more than 30% year over year to $540 million, while earnings growth should follow closely behind at 26% to $2.26 per share. Shares seem reasonably valued, then, trading around three times trailing 12-month sales and just under 23 times next year's expected earnings. As a result, I can understand some shareholders' frustration that their company didn't command a higher acquisition premium. But in the end, I think investors would be wise to simply take profits and put the money to work elsewhere.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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