On Assignment 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 staffing company On Assignment (NAS: ASGN) exploded 28% higher today after the company announced an acquisition.

So what: On Assignment announced it would buy Apex Systems for $600 million, including debt. Management expects the deal to add to earnings this year and help it reach a goal of $1 billion in sales.  

Now what: Apex had about $700 million in revenue and $65 million in EBITDA in 2011, so it's not a bad price to pay in a growing market. This part of the industry continues to grow, and investors are betting that this type of consolidation will lead to more pricing power as well. This is an awfully big deal for On Assignment, but if the combined company continues to grow, it could pay off in spades.  

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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.

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