Why Cytec Industries' Shares Jumped


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 specialty chemicals company Cytec Industries (NYS: CYT) rose 11% at the open of trading after the company gave a preview of its second-quarter numbers.

So what: Management said second-quarter adjusted earnings per share would be between $1.50 and $1.55 per share, well outpacing analyst estimates of $1.05. Strong earnings in the coating resins and process separation business drove the better-than-expected results.

Now what: The irony is that Cytec is trying to sell the business that has performed so well in the quarter. But this may give buyers a greater incentive to bid on the deal and even push the price higher. Either way, I think shares are trading at an attractive level for investors. The company's forward P/E ratio is 12.3, and those estimates should be moved higher after this announcement is factored in, providing a catalyst to push shares higher.

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The article Why Cytec Industries' Shares Jumped originally appeared on Fool.com.

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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