Why Owens & Minor Stock Dropped 7% Today
What happened
Shares of medical and surgical equipment manufacturer Owens & Minor (NYSE: OMI) closed 7.1% lower Wednesday after the company filed a Form S-8 registration statement with the Securities and Exchange Commission.
So what
As described in an attached letter from its legal counsel, Owens & Minor is registering 1 million new shares for issuance to its employees under its 2021 Teammate Stock Purchase Plan.
Investors seem to be treating the filing as if it were referring simply to a dilutive stock issuance, but if that's the case, they may be making a mistake. For one thing, the size of the issuance is not large: only about 1.3% of all shares that will be outstanding even if the stock purchase plan is implemented in full. This doesn't seem to justify the 7.1% hit the stock took today.
And these shares aren't being handed out for free. The S-8 form clearly states that the company is anticipating receiving approximately $27.36 per share issued under the plan, only about a 5% discount to Tuesday's closing price, and actually more than the shares closed at today.
Image source: Getty Images.
Now what
Today's sell-off feels like an overreaction. With Owens & Minor now selling for only 7.5 times trailing (or even 12.8 times FCF with net debt factored into the equation), this is not an expensive stock.
In fact, today's sell-off might even be offering new investors .
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