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Why Quantex Building Products Corporation's Shares Jumped Today

By Travis Hoium - Feb 10, 2014 at 3:32PM

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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 investing thesis.

What: Shares of Quanex Building Products Corporation (NX 1.06%) jumped as much as 11% today after announcing an asset sale.

So what: Quanex is selling a Nichols Aluminum, LLC, a subsidiary that makes flat-rolled aluminum sheet products, to Aleris for $110 million in cash. This will allow the company to focus on its main market, supplying products for the window and door industry.  

Now what: Management is seeing an opportunity to focus on the growing housing and commercial building markets. The company has very little debt so this makes the balance sheet even more attractive, but the success of the deal will come down to Quanex growing the remaining business. It's been holding near break even but investors are expecting a jump in profit this year and next, so keep an eye on performance this year.

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.

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Quanex Building Products Corporation Stock Quote
Quanex Building Products Corporation
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