Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Diamond Resorts International Inc Popped 28% Today

By Travis Hoium - Feb 25, 2016 at 1:25PM

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

Could a buyout be on the horizon for this timeshare giant?

Image source: Diamond Resorts International.

What: Shares of Diamond Resorts International Inc (NYSE: DRII) jumped as much as 28% Thursday after the company reported earnings and that it will explore strategic alternatives.

So what: Fourth quarter revenue jumped 18% to $273.6 million and net income more than doubled to $49.7 million. But financial improvement isn't what got investors excited about Diamond Resorts International on Thursday. 

Management also announced that it would seek "strategic alternatives to maximize shareholder value." Investment bank Centerview Partners has been hired and will look at the company's options. This could include everything from selling the company to a strategic buyer to taking it private. 

Now what: The move Thursday is really just speculation that someone will swoop in with a big offer for the company. That could be the case eventually, but it's also possible the stock will lose all of Thursday's pop over the next few days.

Timeshare sales can be great in good economic times, making growth look phenomenal, but if the economy slows, interest rates rise, or regulations go against the industry it could eat into value very quickly, something we saw during the last recession.

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

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.