Noranda Aluminum Shares Popped: 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 aluminum manufacturer Noranda Aluminum (NYS: NOR) jumped 22% today after the company released earnings and said it would pay a dividend.
So what: Revenue of $400.4 million in the third quarter easily beat estimates of $363.9 million but earnings per share of $0.21 fell two cents short of estimates. But the biggest news was a quarterly cash dividend of $0.03 and a special dividend of $1.00 to be paid on Nov. 22 to shareholders of record on Nov. 14.
Now what: The earnings report was good but not worthy of a 22% jump, so investors obviously have their eyes on that dividend. The biggest problem I see is that buyers are paying $1.84 more today to get $1.03 in dividend later this month, not a great return on investment. It may be good that Noranda is returning money to shareholders but I think the move today is a little overdone.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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.