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Prestige Brands - Momentum
2/16/2012 12:00:00 AM
Just a month ago, we first featured PBH as a value stock that was worth looking into. In less than 30 days since that report the stock has gained 20% in value, reported a strong quarter and has built quite a bit of momentum behind it. The stock is currently consolidating near its 52-week high and could be poised for another leg up. Even with its recent run, Prestige Brands is still fairly valued from an earnings perspective and is still a Zacks Rank #1 Strong Buy.
As the market melts higher and investors look for stability combined with growth, consumer staple stocks like PBH shouldn't be ignored. Keep in mind that Prestige has a little more pep in its step than a stock like Johnson & Johnson.
Company Description & Developments
Its products are an integral part of everyday life and will generally sustain well in stagnant or slow economies. While staples may not take off in bull markets, they will generally participate. Small Cap Value stocks like Prestige Brands will offer a little more beta (volatility) than their larger peers like Procter & Gamble and Johnson & Johnson.
Prestige just reported fiscal (2012) third quarter results on
February 9th and saw net income more than quadruple compared to the
same quarter one year ago. The company cited key acquisitions
and strong sales of some of their over-the-counter (OTC) health
Financial Profile & Earnings
They reported net income of $9.5 million, or $0.19 per diluted share for Q32012, 336.6% higher than the prior year's comparable quarter of $2.2 million, or $0.04 per diluted share. The holding company reported a quarterly sales increase of 2% at their last earnings report. Annual sales were up 17.45% compared to Q32011. To date, PBH has total sales of roughly $333.72 million. Prestige is expected to earn $0.96 per share in FY2012 according to the Zacks Consensus Estimate.
Excluding the costs mentioned above in each of the respective periods, net income for the current third fiscal quarter would have been $12.5 million, or EPS of $0.25, compared to $10.3 million in the prior year's comparable quarter of EPS of $0.21. Net income for the first nine months of fiscal 2012 was $37.2 million, or 63.2% higher than the prior year's comparable period of $22.8 million.
It seems that Prestige is growing and improving profitability despite a lackluster economic landscape. They did see sales growth of 3.2% in their 5 core products and expect growth to continue albeit cautiously in the coming quarter.
Market Performance & Technicals
A repeat of that action could put the stock up around the $16-$18 level from here.
Depending on the evolution of consumer strength (and health)
here in the US, that rally could be possible. PBH is firmly
above its 50- and 200-day moving averages of $11.66 and $11.14
respectively. You can look for that area to be support from
here. Prestige should also find a little sticky support at
the $13 level.
PRESTIGE BRANDS ( PBH ): Free Stock Analysis Report
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