Collective Brands Shares Surged: What You Need to Know
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 shoemaker Collective Brands (NYS: PSS) marched forward 20% after announcing "aggressive actions" to improve its business.
So what: Weak customer traffic has been weighing on Collective Brands, but its plan to close roughly 475 underperforming stores in the next three years should certainly boost results. More importantly, management's bigger picture decision to look into "strategic and financial alternatives to further enhance shareholder value" has triggered speculation that an asset sale, or a sale of the company outright, is a real possibility.
Now what: Don't let this rally prevent you from at least looking into the stock. Even with today's big surge, Collective Brands is still down about 45% over the past six months and continues to trade at a forward P/E discount to rivals like DSW (NYS: DSW) and Wal-Mart (NYS: WMT) . When you couple that cheapish valuation with a fresh set of potentially value-unlocking catalysts, Collective Brands is certainly worth some research.
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At the time this article was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Wal-Mart. The Fool owns shares of Wal-Mart. 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 Fool'sdisclosure policyalways gets a perfect score.
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