Why Energizer's Shares Jumped
Nov 9th 2012 4:52PM
Updated Nov 9th 2012 4:56PM
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 battery maker Energizer Holdings (NYS: ENR) jumped 10% today, after the company announced a restructuring.
So what: As usual, restructuring is really code for layoffs and, in this iteration, Energizer is planning to layoff 1,500 people, or 10% of its workforce. The company expects this to save $200 million pre-tax spending by 2014.
Now what: Demand fell in the most recent quarter, but Energizer is still a highly-profitable company, predicting $6.75 to $7.00 per share in earnings next year. Layoffs always make me nervous because it's either an indication that a company sees weaker sales ahead, or that it doesn't know how to grow its existing business. After all, more workers mean more sales can be done, and the opposite is true. I would be a seller today contrary to the markets move because I think it's a sign that long-term growth will be slow and potentially decline.
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The article Why Energizer's Shares Jumped originally appeared on Fool.com.Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool owns shares of Energizer Holdings. Motley Fool newsletter services recommend Energizer Holdings. 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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