Prestige Brands Holdings, Inc.
) recently made the largest acquisition in its history, buying 17
over-the-counter drug brands from GlaxoSmithKline for $660 million.
This Zacks #1 Rank (Strong Buy) has a forward P/E of just 11.8.
Prestige Brands distributes over-the-counter healthcare, personal
care and household products worldwide.
Many of the brands are well known and have been around for 70 years
or more such as Spic and Span, Comet, Compound W wart treatment,
Chloraseptic sore throat products, and Cutex nail polish remover.
Acquisition of GSK Brands
On Dec 20, the company announced it was acquiring 17
over-the-counter pharmaceutical brands from GSK for $660 million in
cash. The deal is expected to close in the first half of 2012 and
be accretive to earnings in fiscal 2013 which begins on Apr 1,
Some of the brands include the pain relievers BC, Goody's and
Ecotrin, the gastrointestinal (GI) aids Tagamet and Fiber Choice
and sleep aid Sominex. The company will have two new platforms with
adult aspirin-based analgesics and GIs.
Prestige Brands had already been on an acquisition spree in 2011.
It had bought 5 brands from Blacksmith Brands and the Dramamine
brand from Johnson and Johnson.
Fiscal 2013 Zacks Consensus Estimate Rises
Analysts have been bullish about the GSK acquisition. But that
won't be accretive until the next fiscal year.
That's where you can see the analyst optimism. The fiscal 2013
Zacks Consensus Estimate has moved higher since the announcement. 3
estimates have been revised up pushing the Zacks Consensus to $1.08
That is earnings growth of 13.2% as the company is expected to make
95 cents per share in fiscal 2012.
The fiscal 2012 Zacks Consensus has been holding steady at 95 cents
the last 3 months.
Prestige Brands is scheduled to report fiscal third quarter results
on Feb 8.
Lots of Value
Shares sold off, like just about every stock, during the summer of
2011. It has since bounced on news of the acquisition.
Prestige Brands has attractive valuations here. In addition to a
forward P/E under the 12.4 average for the S&P 500, it also has
a price-to-book ratio of just 1.4. A P/B ratio under 3.0 usually
Additionally, the company has a solid 1-year return on equity (ROE)
Prestige Brands is a value stock with a growth component thanks to
strategic additions of key consumer brands.
Tracey Ryniec is the Value Stock Strategist for
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
PRESTIGE BRANDS (
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