Please ensure Javascript is enabled for purposes of website accessibility

Why Aaron's Shares Jumped

By Jeremy Bowman - Feb 7, 2014 at 4:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful? Or just another movement?

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 thesis.

What: Shares of Aaron's (AAN) were topping the charts once again, climbing as much as 19% after reporting earnings and receiving a buyout offer.

So what: The lease-to-own big-box store beat earnings estimates by $0.01, with a per-share profit of $0.30, though revenue fell 2.6%, to $553.9 million, slightly below the consensus at $554.9 million. Same-store sales also fell 0.9%, and first-quarter guidance was weaker than expected. What seemed to drive the spike in share price was Vintage Capital Management's disclosure of a 9.5% stake in the company, and that it made an offer to acquire Aaron's for $2.3 billion. or $30.50 a share, a 13% premium over Thursday's closing price.

Now what: Shares initially jumped as high as $32.21 this morning, but cooled down over the course of the day as it became the apparent that Aaron's may not accept the offer. Vintage has already made three private offers since 2011, but all were ignored by the Board of Directors. This being a public offer, the outcome could be different, and Aaron's management said on the earnings call that it will "evaluate it." Shares were up just 4% by the end of the trading day, however, indicating investors aren't holding their breath.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PROG Holdings, Inc. Stock Quote
PROG Holdings, Inc.
AAN

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.