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 discrete semiconductor and passive electronic component manufacturer Vishay Intertechnology
So what: On Tuesday, Vishay agreed to buy HiRel Systems for $85 million in order to strengthen its position in specialty magnetic products. According to Vishay CEO Dr. Gerald Paul, shareholders can expect to see acquisitions like this from time to time as the company looks for ways to grow its business.
Now what: The one thing that was missing from yesterday's buyout news was whether this purchase would be accretive to earnings and when. Without that piece of information, I'm always skeptical of even the smallest of buyouts. Like many semiconductor stocks, Vishay is relatively inexpensive based on its trailing-12-month EPS -- but just like nearly every stock in the sector, sales are contracting with revenue expected to drop in fiscal 2011 and 2012. It's not shocking to see Vishay use some of its ample cash for sales growth purposes, but I'm not convinced even at 1.1 times book value that the stock is a buy here. I'd take a watch-and-wait approach.
Craving more input? Start by adding Vishay Intertechnology to your free and personalized watchlist so you can keep track of the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. 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.