Energizer reported mixed second-quarter fiscal 2014. Although
earnings per share beat the Zacks Consensus Estimate, revenues
missed the same. Quarter results were negatively impacted by
unfavorable global currencies, pricing controls and import
restrictions in certain Latin American countries. However,
management's revenue guidance for the rest of the year remains
weak. The expected decline in Household Product volume, unfavorable
foreign exchange and increasing competition are the near-term
headwinds. Moreover, continued brand investment will hurt
profitability. However, we believe that product innovations,
prudent product mix, strong sales from the newly acquired brands
and restructuring initiatives will positively impact second-half
2014 results. The proposed spin-off is a positive for investors in
the long run. Thus, we maintain our Neutral recommendation and set
a price target of $120.00.
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. 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 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
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
ENERGIZER HLDGS (ENR): Free Stock Analysis
To read this article on Zacks.com click here.