A month has gone by since the last earnings report for Energizer Holdings (ENR). Shares have added about 2.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Energizer due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Energizer Holdings Q3 Earnings Meet Estimates, Rise Y/Y
Energizer Holdings reported decent third-quarter fiscal 2018 results. The company's adjusted earnings per share (EPS) of 54 cents came in line with the Zacks Consensus Estimate. Moreover, the figure was up 25.6% from the year-ago quarter. Including one-time items, earnings were 39 cents a share compared with 40 cents reported in the year-ago period.
Revenues of $392.8 million slightly beat the consensus mark of $392 million and increased 5.6% on a year-over-year basis. The year-over-year revenue growth was boosted by increased organic net sales of 5.3% and favorable currency impact of 0.3%. The increase in organic revenues was driven by gains in volume and distribution, continued pricing favorability, and the carryover benefits of portfolio optimization.
Batteries revenues (89% of total revenues) grew 7.5% year over year to $350.1 million, while revenues from Other segment (11%) fell 7.6% to $42.7 million.
In Americas, the company recorded revenues of $241.3 million, up 5.6% from last-year quarter. Revenues from International were $151.5 million, up 5.6% from the year-ago quarter.
Gross margin expanded 210 basis points (bps) to 44.8% due to favorable product mix and currency movement along with carryover benefits of portfolio optimization. Selling, general and administrative expenses, excluding acquisition and integration costs, amounted to $111.9 million, reflecting a decrease of $25.6 million from the year-ago quarter.
Other Financial Details
Energizer ended the quarter with cash and cash equivalents of $510.9 million, long-term debt of $976.7 million and shareholders' equity of $47.8 million.
The company generated cash flow from operations of $188 million during the first-nine months of fiscal 2018. Adjusted free cash flow during the period amounted to $193.5 million or 14.4% of net sales. The company recorded capital expenditures of $17.2 million in the quarter.
Further, on a year-to-date basis, the company repurchased shares worth $50 million.
For fiscal 2018, Energizer continues to expect earnings per share in the band of $3.30-$3.40. Both sales and organic revenues for fiscal 2018 are anticipated to grow low single-digits.
Gross margin is expected to be flat to up 25 bps, excluding acquisition and integration costs. In fiscal 2018, SG&A expenses as a percentage of sales is projected to remain flat year over year, excluding acquisition and integration costs.
Capex is expected to be approximately $30 million. Adjusted free cash flow is anticipated in the band of $240-$250 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Energizer has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Energizer has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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