Is Cendant (NYSE:CD) coming together just as it's coming undone? The company scored with a better-than-expected March quarter just as it's planning on splitting up into more manageable chunks.
Wednesday night, the Motley Fool Inside Value recommendation posted earnings of $0.16 a share from continuing operations before charges related to the company's planned spinoffs. That was more than twice the $0.06 it earned a year earlier and comfortably ahead of the $0.14-per-share showing that analysts were banking on.
But dig deeper into the numbers, and it's not all so rosy. Just one of the company's many operating subsidiaries -- its timeshare business -- came through with higher EBITDA during the period. On the flipside, all of the company's segments were successful in growing revenue from last year's first quarter.
That should give investors a glimmer of what's to come after the company completes the corporate separation process. Independent -- and focused -- entities may have a better shot at improving their margins to cash in on their top-line upticks.
Cendant already started shedding some of its weight after completing the spinoff of its PHH (NYSE:PHH) mortgage management business. The company will divide into at least three other publicly traded companies when it packages its real estate operations, hospitality, and car-rental services as stand-alone corporations. The company was also going to unload its travel distribution business, but it's now exploring the possibility of selling it outright.
Like Viacom (NYSE:VIA) and Tyco (NYSE:TYC), Cendant is hoping that investors will value the company greater in pieces than as a whole. Folks who may have been intrigued by the company's Orbitz travel site or Wyndham resorts but felt that the Avis and Budget rental car business were sandbagging growth will soon be able to buy Cendant off the a la carte menu.
Even though shares of Cendant are trading lower now than when Philip Durell singled them out to Inside Value subscribers early last year, there may be a little more interest in the company now that its bottom line is improving as it nears closer to the breakup.
It's sad, in a way. Cendant is being dismantled just as its collection of hodgepodge properties is starting to make fiscal sense.
Cendant and Tyco are both Motley Fool Inside Value picks. Take the newsletter dedicated to top-shelf stocks at bargain-basement prices for a 30-day free spin.
Longtime Fool contributor Rick Munarriz has used Orbitz for travel bookings in the past. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
