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Prestige Consumer Stock Down 9% on Soft Preliminary Results
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Prestige Consumer Healthcare Inc. (PBH - Free Report) reported soft preliminary revenue numbers for third-quarter fiscal 2019. Following the results, management trimmed the outlook for the fiscal. Notably, these were enough to dampen investors’ spirits, as evident from the stock’s decline of 9% on Jan 14. Incidentally, the stock has fallen 26.1% in the past three months, compared with the industry’s decline of 7.2%.
Dull Q3 Revenue Weighs on Outlook
Per the preliminary results, revenues of nearly $241.4 million is expected for the third quarter. This reflects a decline of 10.8% from the year-ago quarter’s tally of $270.6 million. Management highlighted that inventory reductions across certain key retailers weighed on top-line performance for the said period. Deeper insight on this is expected in the company’s upcoming third-quarter earnings release on Feb 7.
We note that Prestige Consumer’s revenues have been sluggish for a while. In fact, the top line declined during the first and the second quarters of fiscal 2019 owing to changes in accounting policies and packaging expenses of Goody’s and BC brands. Sustained weakness in revenues is likely to hurt the company’s profitability and impair business growth momentum.
Further, dismal revenue picture combined with adverse foreign currency translations led management to lower fiscal 2019 view. Management now expects revenues in the band of $970-$975 million as compared with the earlier projection of $985-$995 million. Adjusted earnings per share are likely to be in the range of $2.75 to $2.78 compared with the earlier expectations in the band of $2.84-$2.92. Additionally, adjusted free cash flow is anticipated to come in at $200 million or more, compared with prior projection of $205 million or more.
Any Hopes of a Turnaround?
Although the trimmed outlook and weak preliminary third-quarter revenues have made matters unappealing, upon closer inspection we note that Prestige Consumer does carry a few upsides that can’t easily be ignored. In this respect, its worthy to mention that the company has been gaining from strong consumption trend in some of its core brands, especially in the healthcare category. This trend particularly fueled the company’s North American OTC Healthcare segment during the second quarter of fiscal 2019. We note that in fiscal 2018, Prestige Brands witnessed company-wide consumption growth of approximately 3%. In fact, management had earlier stated that it expects 2-3% growth in consumption rates in fiscal 2019.
Additionally, Prestige Consumer pursues strategic mergers and acquisitions to bolster portfolio strength. Notable buyouts of the company include BC and Goody's, Fleet, DenTek Holdings, Inc and Hydralyte. Moreover, the company is on-track with its strategy of improving brands and marketing capabilities of its acquired businesses.
All said, we expect that the aforementioned growth initiatives combined with a booming healthcare business will aid in uplifting investors’ sentiments regarding this Zacks Rank #3 (Hold) stock.
Looking for Consumer Discretionary Stocks? Check These
Crocs, Inc. (CROX - Free Report) , sporting a Zacks Rank #1 (Strong Buy), delivered average positive earnings surprise of 126.3% in the trailing four quarters. The company has a long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.
lululemon athletica inc. (LULU - Free Report) , also flaunting a Zacks Rank #1, delivered average positive earnings surprise of 19.5% in the trailing four quarters. It has long-term earnings growth rate of 19.3%.
Under Armour, Inc. (UAA - Free Report) , a Zacks Rank #2 (Buy) stock, has a long-term earnings growth rate of 22.8%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Prestige Consumer Stock Down 9% on Soft Preliminary Results
Prestige Consumer Healthcare Inc. (PBH - Free Report) reported soft preliminary revenue numbers for third-quarter fiscal 2019. Following the results, management trimmed the outlook for the fiscal. Notably, these were enough to dampen investors’ spirits, as evident from the stock’s decline of 9% on Jan 14. Incidentally, the stock has fallen 26.1% in the past three months, compared with the industry’s decline of 7.2%.
Dull Q3 Revenue Weighs on Outlook
Per the preliminary results, revenues of nearly $241.4 million is expected for the third quarter. This reflects a decline of 10.8% from the year-ago quarter’s tally of $270.6 million. Management highlighted that inventory reductions across certain key retailers weighed on top-line performance for the said period. Deeper insight on this is expected in the company’s upcoming third-quarter earnings release on Feb 7.
We note that Prestige Consumer’s revenues have been sluggish for a while. In fact, the top line declined during the first and the second quarters of fiscal 2019 owing to changes in accounting policies and packaging expenses of Goody’s and BC brands. Sustained weakness in revenues is likely to hurt the company’s profitability and impair business growth momentum.
Further, dismal revenue picture combined with adverse foreign currency translations led management to lower fiscal 2019 view. Management now expects revenues in the band of $970-$975 million as compared with the earlier projection of $985-$995 million. Adjusted earnings per share are likely to be in the range of $2.75 to $2.78 compared with the earlier expectations in the band of $2.84-$2.92. Additionally, adjusted free cash flow is anticipated to come in at $200 million or more, compared with prior projection of $205 million or more.
Any Hopes of a Turnaround?
Although the trimmed outlook and weak preliminary third-quarter revenues have made matters unappealing, upon closer inspection we note that Prestige Consumer does carry a few upsides that can’t easily be ignored. In this respect, its worthy to mention that the company has been gaining from strong consumption trend in some of its core brands, especially in the healthcare category. This trend particularly fueled the company’s North American OTC Healthcare segment during the second quarter of fiscal 2019. We note that in fiscal 2018, Prestige Brands witnessed company-wide consumption growth of approximately 3%. In fact, management had earlier stated that it expects 2-3% growth in consumption rates in fiscal 2019.
Additionally, Prestige Consumer pursues strategic mergers and acquisitions to bolster portfolio strength. Notable buyouts of the company include BC and Goody's, Fleet, DenTek Holdings, Inc and Hydralyte. Moreover, the company is on-track with its strategy of improving brands and marketing capabilities of its acquired businesses.
All said, we expect that the aforementioned growth initiatives combined with a booming healthcare business will aid in uplifting investors’ sentiments regarding this Zacks Rank #3 (Hold) stock.
Looking for Consumer Discretionary Stocks? Check These
Crocs, Inc. (CROX - Free Report) , sporting a Zacks Rank #1 (Strong Buy), delivered average positive earnings surprise of 126.3% in the trailing four quarters. The company has a long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.
lululemon athletica inc. (LULU - Free Report) , also flaunting a Zacks Rank #1, delivered average positive earnings surprise of 19.5% in the trailing four quarters. It has long-term earnings growth rate of 19.3%.
Under Armour, Inc. (UAA - Free Report) , a Zacks Rank #2 (Buy) stock, has a long-term earnings growth rate of 22.8%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>