Why Shares of Brink's Company Plunged Today
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 security provider Brink's Company dropped 13% after announcing changes to its policies in Venezuela.
So what: Brink's is writing down the value if its Venezuelan business after the country's currency plunged 88% last month. The company will now use the 50 bolivars per dollar exchange rate, which will devalue assets worth $120 million at the end of 2013. Hypothetical 2013 earnings using the new rate would have resulted in a profit decline from $2.37 per share to $1.55 per share.
Now what: This will have a huge impact on earnings going forward because the Venezuelan business was a significant portion of operations. I'm actually surprised the stock isn't down more given the huge drop in earnings that will be coming this year. I definitely don't see this as a reason to jump into the stock today, and would wait for the sell-off to settle before reevaluating.
Boost your 2014 returns with The Motley Fool's top stock
Brink's isn't a buy today but we have one stock that is. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.
The article Why Shares of Brink's Company Plunged Today originally appeared on Fool.com.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.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.