What Happened?
Shares of household products company Reynolds (NASDAQ: REYN) jumped 3.6% in the afternoon session after reports revealed it would be added to the S&P SmallCap 600 index.
The maker of Reynolds Wrap aluminum foil and Hefty trash bags was set to replace SpartanNash in the index effective Wednesday, September 24. This inclusion is significant because it typically forces index-tracking funds and ETFs to buy the stock to mirror the benchmark's holdings. The required purchases created a surge in demand for the company's shares.
The shares closed the day at $23.52, up 3.3% from previous close.
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What Is The Market Telling Us
Reynolds’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 6.2% on the news that the company reported second-quarter results that beat Wall Street estimates for both revenue and adjusted earnings per share.
The maker of Hefty bags and Reynolds Wrap posted adjusted earnings of $0.39 per share on revenue of $938 million, which exceeded analyst forecasts. However, the positive results were tempered by other figures. The company’s net income declined to $73 million from $97 million in the same quarter last year, reflecting higher costs.
Furthermore, Reynolds reaffirmed its full-year 2025 guidance, which projected a low single-digit decline in net revenues compared to the prior year. The company's forecast for the third quarter was also in line with consensus, offering no significant upside surprise to investors.
Reynolds is down 12.3% since the beginning of the year, and at $23.52 per share, it is trading 24.5% below its 52-week high of $31.14 from September 2024. Investors who bought $1,000 worth of Reynolds’s shares 5 years ago would now be looking at an investment worth $739.16.
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