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 Kraton Performance Polymers (NYSE:KRA) fell 14% today after the company announced a profit delay for an acquisition.
So what: Kraton is buying LCY Chemical's SBY business, which the company expected to add to earnings in the first year after the merger is complete. But oversupply of co-polymers in China and lower demand for pavement and shoes has hit to earnings. It's now expected to be 2016 before the acquisition adds to earnings.
Now what: Management said the acquisition is now expected to close in the fourth quarter of this year, after which it would dilute earnings by $0.19 in 2015 and add about $0.29 in 2016. The purchase price can't be adjusted due to SBC's deterioration, and Kraton's board reportedly doesn't want to pay the $25 million termination fee. This is bad news for earnings in the short term, but over the long term the deal will still add to earnings, which is a good deal for investors buying at a discount today.
Will this stock be your next multi-bagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.
Travis Hoium 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.