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.
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 $4.45 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 &
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.