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Bear of the Day: Edgewell Personal Care (EPC)

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Edgewell Personal Care Co. (EPC - Free Report) manufactures and markets personal care products. Its brand portfolio consists of Schick, Skintimate, Wilkinson Sword men’s and women’s shaving products and disposable razors; Banana Boat and Hawaiian Tropic sun care products, Diaper Genie; Playtex, Stayfree, and Carefree feminine care products; and Wet Ones wipes.

Q4 Earnings Recap

Both the top and bottom line beat the Zacks Consensus estimate but were still down year-over-year.

Adjusted EPS was $0.59 and revenue fell 7.4% to $488.8 million, while organic net sales were down 3.5%

Looking at segment performance, Wet Shave sales decreased 4%; Sun and Skin Care jumped 15% thanks to strong demand for Wet Ones; and Feminine Care fell 10.8% due to Covid-19 related category softness.

Gross margin increased 180 basis points for the quarter, while gross profit decreased $7.9 million compared to the prior year period.

Bottom Line

EPC is now a Zacks Rank #5 (Strong Sell).

Four analysts cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 18 cents to $2.72 per share; earnings are expected to be flat for fiscal 2021.

Shares have gained 48% since the March lows, but are lagging the S&P 500’s 57+% rebound during the same time frame.

For fiscal 2021, Edgewell expects net sales to increase in the mid-single digits, with organic sales growth in the low-single digits; adjusted EPS is expected in the range of $2.62 to $2.82

Edgewell is continuing to work on beefing up its online presence, which it will need to drive sales in the short- and long-term, as well as to better compete with competitors like Dollar Shave Club.

Management is confident in EPC’s positioning going forward, and while the company looks to be on the road to recovery, the Covid-19 crisis will likely be a growth obstacle for a while now, as the pandemic has altered the way in which consumers shop for everyday necessities.

Investors who are interested in adding a consumer products peer to their portfolio could consider Sharpie and Rubbermaid manufacturer Newell Brands (NWL - Free Report) . NWL is a #1 (Strong Buy) on the Zacks Rank, and shares have jumped roughly 88% since mid-March.

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