A down day in the markets Thursday was quietly a fairly big day for a couple down-and-out smaller names. Neither garners much attention from the analyst or investor community these days, and we'll see if Thursday's developments are a new start.
NL Industries Inc. (NL) , a sum-of-the-parts story, somewhat surprisingly declared a four-cent quarterly dividend after the market closed on Wednesday. Now, while that may seem minor, consider that NL last paid a dividend in 2013. In addition, at Thursday's closing price, the payout implies a forward dividend yield of 4.1%. Shares rose 16% on the news. Perhaps better yet, this move may open some interest in NL, which currently is covered by just one analyst.
NL currently trades at 8.5x trailing earnings, 6x next year's "consensus" (again, not much of a consensus with one analyst) and 0.69x tangible book value. The sum-of-the-parts moniker comes from the company's ownership interests in three publicly traded names; Kronos Worldwide (KRO) , CompX International (CIX) and Valhi Inc. (VHI) .
It's a complicated story for sure, and one that has been clouded by lawsuits over lead-based paint (NL was formerly known as the National Lead Company). Much of that cloud was lifted last July in a settlement between a group of companies, including NL and Sherwin-Williams (SHW) and the state of California, but the market has not bought in. NL briefly rose to about $5 a share following the settlement, but quickly fell back to the $3 range and has been range-bound ever since. The dividend is a positive development and should garner more interest in NL.
Meanwhile, specialty retailer Ascena Retail Group (ASNA) , which has been all but left for dead by a market that is predicting bankruptcy for the company, rose 43% on Thursday after announcing that its wind-down of its Dressbarn brand is done. According to Ascena, positive sales trends in the wind-down "fully offset" the $60 million of associated closing costs. In addition, $300 million of lease liability has been eliminated. This is another step in Ascena's potential recovery; one of the reasons the stock has been so weak was fear over Dressbarn lease liabilities.
However, Thursday's uptick is still just a blip on ASNA's price chart. Ascena underwent a 1-for-20 reverse stock split in December so that it could retain its Nasdaq listing. Over the past year Ascena shares are down 86% and the shares are trading more like an option on company survival than a stock. This one was in the "even too ugly for me" category until I became more comfortable with the notion that the market may be premature in predicting its demise.
