Why Meritor, Inc.'s Shares Popped Today

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
Jan 29, 2014 at 3:10PM

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 Meritor, Inc. (NYSE:MTOR) jumped 10% today after the company reported earnings.

So what: Fiscal-first-quarter revenue was up 2% to $907 million and net income fell almost in half to $11 million, or $0.11 per share. Adjusted income, which analysts compare against, was $12 million, or $0.12 per share, $0.05 ahead of estimate.

Now what: Results beat expectations and management reiterated 2014 earnings guidance of $0.30-$0.40 per share. But that doesn't give investors much value at 26 times the high end of earnings. I also don't like the slow growth so I'm definitely not a buyer today.

Beating estimates are great but in a slow-growth company I'm going to need a much better value than Meritor's shares offer today.