Shares of leading greeting-cards company American Greetings (NYSE: AM) climbed more than four percent on Thursday after the company announced it was planning to spin off its e-commerce business and take it public. American Greetings stock rose 1-3/16 to 29, even though the company also reported a 68 percent decline in first-quarter sales on Thursday.
That sales number isn’t as bad as it may seem, however. American Greetings’ first-quarter earnings of 16 cents a share was still four cents better than the consensus estimate by analysts. American Greetings says the sales decline is the result of its efforts to lower inventory levels in retail stores. There could be a lot of upside for this stock, which has a healthy price/earnings ratio and offers a healthy dividend.
Taking its e-commerce business public could raise the value of the stock, but investors also should be careful not to overestimate the value of the public offering. Recently, shares of Barnes & Noble (Nasdaq: BKS) ran up in anticipation of the IPO of barnesandnoble.com (Nasdaq: BNBN), but a disappointing showing by the public offering dragged the stock back down.