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Prestige Consumer Healthcare Inc. (PBH - Free Report) delivered third-quarter fiscal 2024 diluted earnings per share (EPS) of $1.06, an increase of 1.9% from the year-ago period’s figure. The metric also surpassed the Zacks Consensus Estimate by 1.9%.
Revenues
Total revenues in the third quarter rose 2.6% year over year (same on an organic basis) to $282.7 million and topped the Zacks Consensus Estimate by 0.9%.
The revenue performance for the quarter was led by strong Eye & Ear Care category performance in North America and Hydralyte brand growth in the International segment, partially offset by an expected decline in the Cough & Cold category and the planned strategic exit of private-label revenues.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
The company conducts its operations through two reportable segments — North American OTC Healthcare and International OTC Healthcare.
Revenues in the North American OTC Healthcare segment were $236.6 million, down 0.1% from the year-earlier quarter. Our model projected the segment’s revenues to be $239.6 million in the third quarter.
The revenue performance for the quarter was driven by strong Eye & Ear Care category performance, offset by lower Cough & Cold category sales as well as the strategic exit of the private-label business.
Revenues in the International OTC Healthcare segment were $46.2 million, up 19.5% from the year-ago quarter’s figure. The largest driver of the year-over-year increase in revenues was the Gastrointestinal category’s Hydralyte brand.
Our model’s projected revenues from this segment were $40.8 million.
Margins
The gross profit in the fiscal third quarter increased 5% year over year to $159.9 million. Meanwhile, the gross margin expanded 130 basis points (bps) year over year to 56.6% due to a 0.4% decrease in the cost of sales (excluding depreciation).
During the quarter, advertising and marketing expenses rose 29.7% to $39 million, while general and administrative expenses decreased 2% to 26 million. The adjusted operating income (excluding depreciation and amortization) in the quarter under review was $94.5 million, highlighting a decrease of 0.9%. The adjusted operating margin contracted 118 bps to 33.4%.
Financial Update
Prestige Consumer exited the fiscal third quarter of 2024 with cash and cash equivalents of $63.6 million compared with the $60.1 million recorded at the end of the second quarter. The long-term debt totaled $1.20 billion, sequentially down from $1.26 billion at the second quarter-end.
The cumulative net cash provided by operating activities in the third quarter was $182.1 million compared with $110.5 million at the end of the second quarter. The adjusted free cash flow in the quarter was $69.5 million compared with $59.5 million at the end of the second quarter.
Guidance
The company provided an updated outlook for fiscal 2024.
Revenues for the full year are anticipated in the range of $1.135 billion-$1.140 billion (unchanged). Organic revenue growth for the full year is anticipated to be 1%-2% (unchanged). The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $1.14 billion.
Prestige Consumer Healthcare expects fiscal 2024 diluted EPS to be approximately $4.33 (previously between $4.27 and $4.32). The Zacks Consensus Estimate for fiscal 2024 EPS stands at $4.31.
Free cash flow for the full year is likely to be $240 million or more (unchanged).
Our Take
PBH exited the fiscal third quarter of 2024 with better-than-expected revenues and earnings. The top-line performance underscored the strength of the ear and eye brands in the United States as well as continued strength in the international segment. The company updated its EPS outlook for fiscal 2024, backed by its proven business strategy and a well-positioned and diversified portfolio. This bodes well for the stock.
Meanwhile, the contraction of the adjusted operating margin during the quarter is discouraging. Within the North American OTC segment, headwinds related to the strategic exit of the private-label business and weakness in certain non-core brands marred the strength of the Eye and Ear Care category.
Zacks Rank and Other Key Picks
Prestige Consumer Health currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Boston Scientific (BSX - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2, reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Boston Scientific, carrying a Zacks Rank #2, reported a fourth-quarter 2024 adjusted EPS of 55 cents, which beat the Zacks Consensus Estimate by 7.8%. Revenues of $3.73 billion outpaced the Zacks Consensus Estimate by 3.8%.
BSX has a long-term estimated earnings growth rate of 12.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 7.4%.
Cardinal Health, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.
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Prestige Consumer (PBH) Q3 Earnings Top, Gross Margin Expands
Prestige Consumer Healthcare Inc. (PBH - Free Report) delivered third-quarter fiscal 2024 diluted earnings per share (EPS) of $1.06, an increase of 1.9% from the year-ago period’s figure. The metric also surpassed the Zacks Consensus Estimate by 1.9%.
Revenues
Total revenues in the third quarter rose 2.6% year over year (same on an organic basis) to $282.7 million and topped the Zacks Consensus Estimate by 0.9%.
The revenue performance for the quarter was led by strong Eye & Ear Care category performance in North America and Hydralyte brand growth in the International segment, partially offset by an expected decline in the Cough & Cold category and the planned strategic exit of private-label revenues.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
Prestige Consumer Healthcare Inc. price-consensus-eps-surprise-chart | Prestige Consumer Healthcare Inc. Quote
Segments in Detail
The company conducts its operations through two reportable segments — North American OTC Healthcare and International OTC Healthcare.
Revenues in the North American OTC Healthcare segment were $236.6 million, down 0.1% from the year-earlier quarter. Our model projected the segment’s revenues to be $239.6 million in the third quarter.
The revenue performance for the quarter was driven by strong Eye & Ear Care category performance, offset by lower Cough & Cold category sales as well as the strategic exit of the private-label business.
Revenues in the International OTC Healthcare segment were $46.2 million, up 19.5% from the year-ago quarter’s figure. The largest driver of the year-over-year increase in revenues was the Gastrointestinal category’s Hydralyte brand.
Our model’s projected revenues from this segment were $40.8 million.
Margins
The gross profit in the fiscal third quarter increased 5% year over year to $159.9 million. Meanwhile, the gross margin expanded 130 basis points (bps) year over year to 56.6% due to a 0.4% decrease in the cost of sales (excluding depreciation).
During the quarter, advertising and marketing expenses rose 29.7% to $39 million, while general and administrative expenses decreased 2% to 26 million. The adjusted operating income (excluding depreciation and amortization) in the quarter under review was $94.5 million, highlighting a decrease of 0.9%. The adjusted operating margin contracted 118 bps to 33.4%.
Financial Update
Prestige Consumer exited the fiscal third quarter of 2024 with cash and cash equivalents of $63.6 million compared with the $60.1 million recorded at the end of the second quarter. The long-term debt totaled $1.20 billion, sequentially down from $1.26 billion at the second quarter-end.
The cumulative net cash provided by operating activities in the third quarter was $182.1 million compared with $110.5 million at the end of the second quarter. The adjusted free cash flow in the quarter was $69.5 million compared with $59.5 million at the end of the second quarter.
Guidance
The company provided an updated outlook for fiscal 2024.
Revenues for the full year are anticipated in the range of $1.135 billion-$1.140 billion (unchanged). Organic revenue growth for the full year is anticipated to be 1%-2% (unchanged). The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $1.14 billion.
Prestige Consumer Healthcare expects fiscal 2024 diluted EPS to be approximately $4.33 (previously between $4.27 and $4.32). The Zacks Consensus Estimate for fiscal 2024 EPS stands at $4.31.
Free cash flow for the full year is likely to be $240 million or more (unchanged).
Our Take
PBH exited the fiscal third quarter of 2024 with better-than-expected revenues and earnings. The top-line performance underscored the strength of the ear and eye brands in the United States as well as continued strength in the international segment. The company updated its EPS outlook for fiscal 2024, backed by its proven business strategy and a well-positioned and diversified portfolio. This bodes well for the stock.
Meanwhile, the contraction of the adjusted operating margin during the quarter is discouraging. Within the North American OTC segment, headwinds related to the strategic exit of the private-label business and weakness in certain non-core brands marred the strength of the Eye and Ear Care category.
Zacks Rank and Other Key Picks
Prestige Consumer Health currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Boston Scientific (BSX - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2, reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Boston Scientific, carrying a Zacks Rank #2, reported a fourth-quarter 2024 adjusted EPS of 55 cents, which beat the Zacks Consensus Estimate by 7.8%. Revenues of $3.73 billion outpaced the Zacks Consensus Estimate by 3.8%.
BSX has a long-term estimated earnings growth rate of 12.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 7.4%.
Cardinal Health, carrying a Zacks Rank #2, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%.