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Prestige Consumer (PBH) Banks on its Portfolio Amid Cost Woes
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Prestige Consumer Healthcare Inc.’s (PBH - Free Report) brand-building strategy and growing strength in the e-commerce channel are tailwinds. However, rising costs and currency fluctuations continue to mar growth. The stock carries a Zacks Rank #3 (Hold) at present.
Prestige Consumer’s diverse portfolio of well-recognized consumer brands benefits from robust marketing strategies that are designed to enhance sales growth and long-term profitability across major and core brands. The company has a long and successful history in the Eye & Ear Care category with a wide assortment of leading brands like Clear Eyes, TheraTears and Debrox. In the third quarter of fiscal 2024, revenue growth was fueled by the impressive Eye & Ear Care category performance in North America and Hydralyte brand growth in the International segment.
Over the years, the company has expanded its brand portfolio both organically and through acquisitions. It acquired TheraTears and four other over-the-counter consumer brands across the VMS and Cough & Cold categories from the 2021 acquisition of Akorn Operating Company LLC. Having a strong and diverse portfolio of products has provided Prestige Consumer with multiple sources of growth and minimized the impact of any individual category slowdowns. Moreover, this diversity stretches beyond just brands to the diversity of channels, geographies and suppliers, each of which benefits the company’s business in periods of uncertainty and volatility.
Further, over the last several years, Prestige Consumer has developed long-term partnerships across its diverse retail footprint and invested early and heavily in the e-commerce channel. These multi-year investments have been delivering impressive results, continuing the long-term trend of higher online purchasing. The company has delivered solid high-single-digit year-over-year growth in the e-commerce channel and double-digit consumption growth year to date. Simultaneously, the company has been maintaining a consistent profit profile across all its distribution channels. These impressive wins with consumers across e-commerce, through investments in online content and digital advertising, have positioned the company for further growth.
On the flip side, economic conditions in both the United States and globally have been and will continue to be volatile due to several factors, such as supply-chain constraints, rising interest rates, a high inflationary environment and geopolitical events. As a result, these uncertainties could put pressure on prices and supply and potentially affect the demand for Prestige Consumer’s products. For instance, the gross margin of the International OTC Healthcare segment decreased to 57% during the nine months ended Dec 31, 2023, from 60.8% in the year-ago period, primarily due to increased supply-chain costs and product mix.
Further, Prestige Consumer generally relies on brokers and distributors for the sale of its products in foreign countries, having generated approximately 14% of fiscal 2023 revenues from its international business. Hence, fluctuating foreign exchange rates remain a concern, which could result in unfavorable increases in the price of the company’s products or cause increases in the cost of certain products purchased from its foreign third-party manufacturers.
In the third quarter of fiscal 2024, approximately 14.9% of gross revenues were denominated in currencies other than the U.S. dollar. For its analysis, management assumed a hypothetical 10% adverse change in foreign currency exchange rates, which resulted in a less than 5% impact on the pre-tax income of approximately $2.7 million.
Estimates for DaVita’s 2024 earnings per share have moved up from $8.97 to $9.23 in the past 30 days. Shares of the company have surged 69% in the past year compared with the industry’s 23.4% rise.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%. In the last reported quarter, it delivered an earnings surprise of 22.2%.
Cardinal Health’s stock has surged 45.8% in the past year. Earnings estimates for Cardinal Health have risen from $7.28 to $7.29 for fiscal 2024 and from $8.03 to $8.04 for fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.7%.
Estimates for Stryker’s 2024 earnings per share have remained constant at $11.86 in the past 30 days. Shares of the company have moved 24.4% upward in the past year compared with the industry’s rise of 5.8%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%. In the last reported quarter, it delivered an earnings surprise of 5.8%.
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Prestige Consumer (PBH) Banks on its Portfolio Amid Cost Woes
Prestige Consumer Healthcare Inc.’s (PBH - Free Report) brand-building strategy and growing strength in the e-commerce channel are tailwinds. However, rising costs and currency fluctuations continue to mar growth. The stock carries a Zacks Rank #3 (Hold) at present.
Prestige Consumer’s diverse portfolio of well-recognized consumer brands benefits from robust marketing strategies that are designed to enhance sales growth and long-term profitability across major and core brands. The company has a long and successful history in the Eye & Ear Care category with a wide assortment of leading brands like Clear Eyes, TheraTears and Debrox. In the third quarter of fiscal 2024, revenue growth was fueled by the impressive Eye & Ear Care category performance in North America and Hydralyte brand growth in the International segment.
Over the years, the company has expanded its brand portfolio both organically and through acquisitions. It acquired TheraTears and four other over-the-counter consumer brands across the VMS and Cough & Cold categories from the 2021 acquisition of Akorn Operating Company LLC. Having a strong and diverse portfolio of products has provided Prestige Consumer with multiple sources of growth and minimized the impact of any individual category slowdowns. Moreover, this diversity stretches beyond just brands to the diversity of channels, geographies and suppliers, each of which benefits the company’s business in periods of uncertainty and volatility.
Prestige Consumer Healthcare Inc. Price
Prestige Consumer Healthcare Inc. price | Prestige Consumer Healthcare Inc. Quote
Further, over the last several years, Prestige Consumer has developed long-term partnerships across its diverse retail footprint and invested early and heavily in the e-commerce channel. These multi-year investments have been delivering impressive results, continuing the long-term trend of higher online purchasing. The company has delivered solid high-single-digit year-over-year growth in the e-commerce channel and double-digit consumption growth year to date. Simultaneously, the company has been maintaining a consistent profit profile across all its distribution channels. These impressive wins with consumers across e-commerce, through investments in online content and digital advertising, have positioned the company for further growth.
On the flip side, economic conditions in both the United States and globally have been and will continue to be volatile due to several factors, such as supply-chain constraints, rising interest rates, a high inflationary environment and geopolitical events. As a result, these uncertainties could put pressure on prices and supply and potentially affect the demand for Prestige Consumer’s products. For instance, the gross margin of the International OTC Healthcare segment decreased to 57% during the nine months ended Dec 31, 2023, from 60.8% in the year-ago period, primarily due to increased supply-chain costs and product mix.
Further, Prestige Consumer generally relies on brokers and distributors for the sale of its products in foreign countries, having generated approximately 14% of fiscal 2023 revenues from its international business. Hence, fluctuating foreign exchange rates remain a concern, which could result in unfavorable increases in the price of the company’s products or cause increases in the cost of certain products purchased from its foreign third-party manufacturers.
In the third quarter of fiscal 2024, approximately 14.9% of gross revenues were denominated in currencies other than the U.S. dollar. For its analysis, management assumed a hypothetical 10% adverse change in foreign currency exchange rates, which resulted in a less than 5% impact on the pre-tax income of approximately $2.7 million.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita (DVA - Free Report) , Cardinal Health (CAH - Free Report) and Stryker (SYK - Free Report) . While DaVita sports a Zacks Rank #1 (Strong Buy) at present, Cardinal Health and Stryker carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for DaVita’s 2024 earnings per share have moved up from $8.97 to $9.23 in the past 30 days. Shares of the company have surged 69% in the past year compared with the industry’s 23.4% rise.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%. In the last reported quarter, it delivered an earnings surprise of 22.2%.
Cardinal Health’s stock has surged 45.8% in the past year. Earnings estimates for Cardinal Health have risen from $7.28 to $7.29 for fiscal 2024 and from $8.03 to $8.04 for fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.7%.
Estimates for Stryker’s 2024 earnings per share have remained constant at $11.86 in the past 30 days. Shares of the company have moved 24.4% upward in the past year compared with the industry’s rise of 5.8%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%. In the last reported quarter, it delivered an earnings surprise of 5.8%.