All 12 earnings estimates covering
Energizer Holdings Inc.
) for the current fiscal year have been revised higher in the past
30 days, following a solid fiscal fourth quarter that included a
positive earnings surprise of more than 13%. Despite the strong
performance, this Zacks #1 Rank (Strong Buy) manufacturer of
personal care and consumer goods remains undervalued with a forward
price-to-earnings (P/E) multiple of 11.6 and a price-to-book (P/B)
multiple of 2.5.
Energizer's EPS Beats, Revs In Line
On November 8, Energizer Holdings reported fiscal fourth quarter
earnings of $1.76 per share, which comfortably surpassed the Zacks
Consensus Estimate by 13.6% and the year-ago quarter by 60%.
Total revenue declined 4.6% year over year to $1.14 billion, but
was in line with the Zacks Consensus Estimate. The decline was
primarily due to weak organic sales (down 1.5% year over year) and
unfavorable foreign exchange (negative impact of 3.1%).
Gross margin expanded 60 basis points ("bps") on a year-over-year
basis to 46.1%. Operating margin improved to 19.4% from 16.1%,
primarily due to lower operating expenses.
Energizer Holdings expects fiscal 2013 adjusted earnings per share
between $6.75 and $7.00. Management expects fiscal 2013 sales to
grow in the low-single digits, aided by mid-single digit sales
growth in the Personal Care segment.
Energizer Holdings announced a restructuring program to be
completed over the next two years. It is expected to yield pre-tax
cost savings of $200 million on an annualized basis and constitutes
75% of the total cost saving initiatives. Management expects this
initiative to improve profitability with the remainder being put
back into the business to promote long-term growth.
Earnings Estimates Moving Up
The Zacks Consensus Estimate for 2013 has advanced 7.0% to $6.81 in
the past 30 days, as all 12 estimates were revised upward. The
Zacks Consensus Estimate for 2014 improved 5% in that time to
$7.56, thanks to upward revisions from 9 of 12 estimates.
Valuation Continues to Impress
In addition to low P/E and P/B multiples, the stock looks
attractive with respect to the price-to-sales (P/S) multiple of
1.07, compared with industry average of 1.19. A P/E below 15.0, a
P/S ratio less than 1.0 and a P/B ratio under 3.0 generally
suggests a value stock.
Moreover, Energizer Holdings' Return on Equity (ROE) of 19.1%,
Return on Investment (ROI) of 6.1% and Return on Asset (ROA) of
10.0% are also better than the industry averages.
The chart below indicates an uptrend in 2013 and 2014 earnings
estimates, which should encourage investors as the stock is likely
to follow the trend. Also, since shares have not significantly
reacted to positive estimate changes yet, the upside appears likely
in the next few months.
Energizer Holdings is one of the largest manufacturers and
marketers of batteries, lighting and personal care products. The
company offers flashlights and lanterns and other battery-powered
lighting products for home, work and the outdoors. Energizer
Holdings also sells wet shaving products and skin care products for
men and women. The company has market capital of $4.90 billion.
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