Editor's Note

Over time, some companies grow into different areas of operation that eventually flounder because they are a departure from the core business. Some companies never deal with the situation and the poorly performing divisions drag down the earnings of the overall company. Others understand the cancer for what it is and take steps to cut it off and focus on the high margin core business. In this case breaking up is not hard to do. You just have to make the decision.


SPXC - SPX Corporation - Company Profile

SPX provides specialized heating, ventilation and air conditioning (HVAC) solutions worldwide. They also provide instrumentation, detection and measurement for industrial markets. They offer detection and inspection equipment for underground pipes and cables, specialty lighting products, communications technologies and bus fare collection systems. Their power segment provides all types of equipment and technology for the power generation, transmission and distribution market.

As part of a companywide restructuring process in December they agreed to sell their dry-cooling tower business. On the Q4 conference call they also announced plans to sell portions of the power division. They hired an outside advisor to provide strategic alternatives as they sell off the low margin and poorly performing portions of the business. They spun off the flow food and power portion into a new company SPX Flow (FLOW) in September.

They reported earnings of 52 cents that missed estimates of 57 cents. However, shares rebounded on the news of the various restructuring efforts. Shares rallied to resistance at $14.85 at the close today. A break over that resistance could hit $17 in the days ahead.

Earnings are May 26th.

With a trade at $15.05

Buy SPXC shares, initial stop loss $13.25

No options because of wide spreads.


No New Bearish Plays