Why Rexnord's Shares Popped

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 equipment maker Rexnord jumped 11% at the open today after hiring Goldman Sachs to review options for the company. Shares settled at nearly a 4% gain at market close.

So what: Goldman Sachs has been hired to pursue options, including a sale of the whole company or just pieces of the business. The motion-control and water-management businesses may attract strategic buyers willing to pay a premium for their businesses.

Now what: There's no concrete news about sales today, so that's why shares settled lower as the day went on. I wouldn't change your investment thesis completely because there's a good possibility that nothing comes of this move at all. The stock trades at 18 times forward earnings, and earnings growth is expected to be about 20% next year. That's not a cheap stock, and given its low revenue growth, I'm staying away from the speculation today.

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The article Why Rexnord's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. 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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