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Energizer (ENR) Up 9.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Energizer Holdings (ENR - Free Report) . Shares have added about 9.6% in that time frame, outperforming 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 posted solid fourth-quarter fiscal 2022 results. Both the top and the bottom line surpassed the Zacks Consensus Estimate. Moreover, both metrics improved year over year. ENR exited fiscal 2022 on a solid note, generating full-year net sales, adjusted earnings per share and an adjusted EBITDA, in line with its outlook. It accomplished its seventh straight year of net sales growth on robust organic growth in both its operating segments.
Q4 Metrics
Energizer’s adjusted earnings of 82 cents per share beat the Zacks Consensus Estimate of 76 cents and increased 3.8% from the year-ago fiscal quarter’s reported figure.
ENR reported net sales of $790.4 million, exceeding the Zacks Consensus Estimate of $774 million and growing 3.2% from the year-ago fiscal quarter’s reading. Organic sales moved up 7.4% in the quarter under review, benefiting from pricing in both battery and auto care leading to an organic increase of 13.3%. Higher pricing offset lower volume in the battery and auto care.
Segments in Detail
Energizer’s Batteries & Lights segment’s revenues grew 5.9% year over year to $639 million in fourth-quarter fiscal 2022 and beat the consensus mark of $626.8 million. Meanwhile, revenues in the Auto Care segment decreased 6.9% to $151.4 million and lagged the consensus mark of $153 million.
Margins
In the fiscal fourth quarter, Energizer’s adjusted gross margin contracted 150 basis points (bps) to 36.2%. This was mainly driven by increased operating expenses, comprising transportation, material and labor costs, and the ongoing inflationary trends. The operating inefficiencies weakened production volumes, and further hurt ENR’s performance. The margin decline was somewhat offset by higher prices.
Excluding costs related to restructuring, SG&A as a rate of sales was 15.1% compared with 14.3% recorded in the prior-year quarter. On a dollar basis, SG&A rose about 9% to $119.2 million due to increased IT spending related to digital transformation as well as rising compensation costs and recycling fees.
Adjusted EBITDA was $146 million, up 7.4% year over year owing to price increases across both segments and lower A&P spending, partly offset by elevated input costs, higher SG&A and currency headwinds.
Other Financial Details
As of Sep 30, 2022, Energizer’s cash and cash equivalents were $205.3 million, with long-term debt of $3,499.4 million and shareholders' equity of $130.6 million. Subsequent to the year-end, ENR paid down an additional $25 million of debt.
For the year ending Sep 30, 2022, this presently Zacks Rank #3 (Hold) player provided $1 million cash from operations. It paid out dividends of $84.9 million or $1.20 per share.
Outlook
For fiscal 2023, Energizer projects organic revenues to grow in low-single digits on solid pricing actions, partly offset by category volume declines in the Battery and Auto Care segments. It expects low single-digit declines for reported revenues, including currency headwinds of roughly $90 million, based on the September 2022 rates.
Adjusted EBITDA is forecast in the $585-$615 million band, up 10% on a currency-neutral basis at the midpoint. Management envisions adjusted earnings per share of $3-$3.30, up nearly 12% on a currency-neutral basis at the midpoint. Currency headwinds are likely to hurt earnings to the tune of $27 million and 30 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -29.05% due to these changes.
VGM Scores
At this time, Energizer has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions 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.
Performance of an Industry Player
Energizer is part of the Zacks Consumer Products - Staples industry. Over the past month, International Flavors (IFF - Free Report) , a stock from the same industry, has gained 7.3%. The company reported its results for the quarter ended September 2022 more than a month ago.
International Flavors reported revenues of $3.06 billion in the last reported quarter, representing a year-over-year change of -0.3%. EPS of $1.36 for the same period compares with $1.47 a year ago.
For the current quarter, International Flavors is expected to post earnings of $0.95 per share, indicating a change of -13.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for International Flavors. Also, the stock has a VGM Score of B.
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Energizer (ENR) Up 9.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Energizer Holdings (ENR - Free Report) . Shares have added about 9.6% in that time frame, outperforming 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 Q4 Earnings & Sales Beat Estimates, Rise Y/Y
Energizer posted solid fourth-quarter fiscal 2022 results. Both the top and the bottom line surpassed the Zacks Consensus Estimate. Moreover, both metrics improved year over year. ENR exited fiscal 2022 on a solid note, generating full-year net sales, adjusted earnings per share and an adjusted EBITDA, in line with its outlook. It accomplished its seventh straight year of net sales growth on robust organic growth in both its operating segments.
Q4 Metrics
Energizer’s adjusted earnings of 82 cents per share beat the Zacks Consensus Estimate of 76 cents and increased 3.8% from the year-ago fiscal quarter’s reported figure.
ENR reported net sales of $790.4 million, exceeding the Zacks Consensus Estimate of $774 million and growing 3.2% from the year-ago fiscal quarter’s reading. Organic sales moved up 7.4% in the quarter under review, benefiting from pricing in both battery and auto care leading to an organic increase of 13.3%. Higher pricing offset lower volume in the battery and auto care.
Segments in Detail
Energizer’s Batteries & Lights segment’s revenues grew 5.9% year over year to $639 million in fourth-quarter fiscal 2022 and beat the consensus mark of $626.8 million. Meanwhile, revenues in the Auto Care segment decreased 6.9% to $151.4 million and lagged the consensus mark of $153 million.
Margins
In the fiscal fourth quarter, Energizer’s adjusted gross margin contracted 150 basis points (bps) to 36.2%. This was mainly driven by increased operating expenses, comprising transportation, material and labor costs, and the ongoing inflationary trends. The operating inefficiencies weakened production volumes, and further hurt ENR’s performance. The margin decline was somewhat offset by higher prices.
Excluding costs related to restructuring, SG&A as a rate of sales was 15.1% compared with 14.3% recorded in the prior-year quarter. On a dollar basis, SG&A rose about 9% to $119.2 million due to increased IT spending related to digital transformation as well as rising compensation costs and recycling fees.
Adjusted EBITDA was $146 million, up 7.4% year over year owing to price increases across both segments and lower A&P spending, partly offset by elevated input costs, higher SG&A and currency headwinds.
Other Financial Details
As of Sep 30, 2022, Energizer’s cash and cash equivalents were $205.3 million, with long-term debt of $3,499.4 million and shareholders' equity of $130.6 million. Subsequent to the year-end, ENR paid down an additional $25 million of debt.
For the year ending Sep 30, 2022, this presently Zacks Rank #3 (Hold) player provided $1 million cash from operations. It paid out dividends of $84.9 million or $1.20 per share.
Outlook
For fiscal 2023, Energizer projects organic revenues to grow in low-single digits on solid pricing actions, partly offset by category volume declines in the Battery and Auto Care segments. It expects low single-digit declines for reported revenues, including currency headwinds of roughly $90 million, based on the September 2022 rates.
Adjusted EBITDA is forecast in the $585-$615 million band, up 10% on a currency-neutral basis at the midpoint. Management envisions adjusted earnings per share of $3-$3.30, up nearly 12% on a currency-neutral basis at the midpoint. Currency headwinds are likely to hurt earnings to the tune of $27 million and 30 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -29.05% due to these changes.
VGM Scores
At this time, Energizer has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions 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.
Performance of an Industry Player
Energizer is part of the Zacks Consumer Products - Staples industry. Over the past month, International Flavors (IFF - Free Report) , a stock from the same industry, has gained 7.3%. The company reported its results for the quarter ended September 2022 more than a month ago.
International Flavors reported revenues of $3.06 billion in the last reported quarter, representing a year-over-year change of -0.3%. EPS of $1.36 for the same period compares with $1.47 a year ago.
For the current quarter, International Flavors is expected to post earnings of $0.95 per share, indicating a change of -13.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for International Flavors. Also, the stock has a VGM Score of B.