Energizer Holdings Inc. (ENR): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Energizer reported fourth-quarter earnings and revenues that beat the Zacks Consensus Estimate but forward guidance appeared cautious. Unfavorable foreign exchange, increasing competition and pricing pressures remain headwinds. Moreover, continued brand investment will hurt profitability. Nonetheless, we believe that an innovative product pipeline, prudent product mix, strong sales from the newly acquired brands and higher savings from restructuring initiatives will positively impact results in the long run. Further, the proposed spin-off of its two divisions is a positive for investors. Thus, we maintain our Neutral recommendation and set a price target of $134.00.


Overview:

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 2000.

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 $4.45 billion in fiscal 2014. The company reports revenues under two segments: Household Products and Personal Care Products. Energizer recently announced its intention to separate the two divisions into two independent, publicly traded companies. It has been planned as a tax-free spin-off to the company's shareholders and is expected to be completed in the second half of fiscal 2015.

Personal Care Products contributed 58.7% ($2.61 billion) of revenues in fiscal 2014. Through this segment, Energizer offers wet shaving products, skin care products, feminine care products and infant care products.

Household Products contributed 41.3% ($1.84 billion) of revenues in fiscal 2014. 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 50.9% of its revenues from the United Sates while the remaining 49.1% comes from international operations. Energizer derives a significant amount of revenues from a relatively small number of retail customers. In fiscal 2014, Wal-Mart Stores and its subsidiaries accounted for approximately 17.2% 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) and Spectrum Brands. Energizer's principal competitors in the Personal Care business worldwide are Procter & Gamble, the BIC Group, Kimberly-Clark, Bayer AG and Johnson & Johnson.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




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