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 Rayonier (NYSE:RYN) jumped 10% today after the company announced earnings and said that it would split into two businesses.
So what: First, fourth-quarter earnings showed a 35% rise in revenue to $520.2 million and a profit of $80 million, or $0.62 per share, $0.03 better than a year ago. Results topped expectations, but the bigger news was the spin-off.
The performance fibers business will be spun off into a new publicly trading company, and Rayonier will focus on forest resources and real estate. The deal is expected to be completed mid-year.
Now what: Spin-offs are often done when companies think they can get higher valuations as stand-alone companies than they can together. That's the driver of the split, as management sees bullish trends in both cellulose fibers and the housing market -- and with different capital needs, now was the time to split. I don't think this fundamentally changes either company, but the market sees more value with them separate, and new investors will be able to bet on more specific parts of the market.
Fool contributor 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.