Energizer started fiscal 2014 on a dismal note. Not only did the
company miss the Zacks Consensus Estimate on both lines but also
guided lower. Management toned down earnings per share guidance by
$0.25 citing weakness in both household products and personal care
segment. Although the newly acquired feminine brands from Johnson
& Johnson will somewhat boost the top line, intensifying
competition, pricing pressure and retail shelf loss will negatively
affect top-line growth in 2014. Higher advertising & promotion
expenses coupled with additional restructuring charges will also
hurt profitability, going forward. Thus, we downgrade Energizer
from Outperform to Neutral and set a price target of $102.00.
Headquartered in St. Louis, Mo. and founded in 1999, Energizer
Holdings Inc. (ENR) is one of the largest manufacturers and
marketers of batteries, lighting and personal care products in the
wet shave, skin care, feminine care and infant care categories.
Energizer Holdings was spun off from Ralston Purina Company in
Energizer's products are marketed and sold globally in more than
160 countries through direct sales personnel, mass merchandisers,
distributors and wholesalers. The company's two largest categories
by revenues are battery products and wet shave.
Energizer earned revenues of $4.47 billion in fiscal 2013. The
company reports revenues under two segments: Household Products and
Personal Care Products.
Personal Care Products contributed 54.8% of revenues in fiscal
2013. Through this segment, Energizer offers wet shaving products,
skin care products, feminine care products and infant care
Household Products contributed 45.2% of revenues in fiscal 2013.
Under this segment, the company offers flashlights, lanterns and
other battery-powered lighting products for home, work and
outdoors. The company's battery business produces alkaline,
lithium, carbon-zinc and rechargeable batteries. Energizer's
lithium batteries are manufactured for non-consumer industrial
applications and are used in cameras, camcorders, memory backup, CD
players and portable computers.
Energizer generates 50.5% of its revenues from the United Sates
while the remaining 49.5% comes from international operations.
Energizer derives a significant amount of revenues from a
relatively small number of retail customers. In fiscal 2013,
Wal-Mart Stores and its subsidiaries accounted for approximately
20.0% of Energizer's sales.
Energizer operates in a highly competitive market, both in the
Household and Personal Care segments. In the Household segment, the
company faces competition from Duracell (a Proctor & Gamble
subsidiary), Spectrum Brands and Panasonic. Energizer's principal
competitors in the Personal Care business worldwide are Procter
& Gamble, the BIC Group, Kimberly-Clark, Merck & Co. and
Johnson & Johnson.
Energizer Holdings Inc. (ENR): Read the Full
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