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 PNM Resources (NYS: PNM) popped by as much as 20% today on news that it's adopting a new strategic direction while exiting its competitive business in Texas.
So what: The company has reached deals to sell its Texas businesses in order to focus on its regulated utilities. British utility Centrica has agreed to purchase First Choice Power, an energy retailer based in Texas, from PNM for $270 million in cash. PNM is also exiting its ownership role in Optim Energy so that it can focus its resources on operating regulated electric utilities.
Now what: PNM CEO Pat Vincent-Collawn said the changes "will result in PNM Resources being a stronger company with a reduced risk profile and more stable earnings and cash flows." The company plans on using the net proceeds to repurchase debt and equity. The board has signed off on repurchasing up to $75 million of long-term debt and preferred stock. As a result, PNM updated its full-year outlook and now expects ongoing earnings to be between $0.98 and $1.05 per diluted share, up front a range of $0.80 to $0.92. Shareholders are clearly impressed with the plans as the stock has jumped significantly, wiping out most of the decline caused by the recent overall market turmoil.
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