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Why Joy Global, IMAX, and United Rentals Jumped Today


Image source: Joy Global.

The stock market finally pulled back from its record run on Thursday, with gains early in the session giving way to losses of not quite half a percent in the major market benchmarks. Some troubling earnings reports tempered the enthusiasm of bullish investors, bringing the streak of nine up days for the Dow Jones Industrials to an end.

Yet even though the broader market gave up ground, several stocks continued to perform well, and headed higher. Among the biggest gainers on the day were Joy Global (NYSE: JOY), IMAX (NYSE: IMAX), and United Rentals (NYSE: URI).

Joy Global makes a big deal

Joy Global soared almost 20% after the mining-equipment manufacturer agreed to an acquisition bid from rival Komatsu America. The deal values Joy Global at $3.7 billion, and Joy Global shareholders will receive $28.30 in cash for every share they own. If the acquisition goes through, Komatsu will operate Joy Global as a separate subsidiary in order to continue using the company's brand name, and it believes that Joy Global is highly complementary to its own strategic vision and spirit of innovation.

As Joy Global CEO Ted Doheny explained, "We believe this is the right partnership to meet the evolving needs of our customers while furthering our ability to lead the mining industry with game-changing technologies and best-in-class products." The buyout still needs shareholder approval, but the two companies expect the transaction to close by the middle of 2017. The stock rose close to, but not above, the buyout price, signaling that few investors expect a higher rival bid to come for Joy Global.

IMAX gives investors a good show

IMAX climbed 14% in the wake of its second-quarter earnings report late Wednesday. The big-screen theater operator reported a double-digit percentage drop in revenue that pushed adjusted net income down by more than half, but most of the declines were due to a weaker slate of Hollywood releases compared to the year-ago quarter.

A big jump in new business gave investors confidence about the future, and IMAX increased its guidance for new installations for the year by about 10% to 15%, to 155 theaters. Most of the new deals are revenue-sharing arrangements, which will give IMAX more exposure to the success or failure of new releases. But with a future pipeline that includes several potential blockbusters, that could end up being good news for IMAX in the long run.

United Rentals builds a better quarter

Finally, United Rentals gained 9%. The provider of rental equipment for construction applications reported its second-quarter earnings late Wednesday, and investors liked what they saw. Revenue stayed mostly stable compared to year-ago levels, but adjusted earnings per share of $2.06 was more than $0.10 per share higher than United Rentals posted in the second quarter of 2015.

CEO Michael Kneeland was encouraged by what he called "solid customer activity" on both coasts in the U.S., even though conditions in the Canadian market remain under pressure. Reaffirming the company's full-year 2016 guidance, and slightly reducing the extent to which it expects rental rates to fall, United Rentals' optimism was enough to give investors more confidence about the state of the industrial economy and its future prospects.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends IMAX. 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.