On Jul 6, 2013, Zacks Investment Research upgraded Energizer Holdings Inc (ENR - Free Report) to a Zacks Rank #1 (Strong Buy). With a strong return of 37.1% over the past one year and a positive estimate revision trend, Energizer is an attractive investment opportunity.
Why the Upgrade?
Strong second quarter results, innovative product pipeline, stringent cost control and the positive effects of the ongoing restructuring activity contributed to the upgrade.
Energizer reported second quarter results on May 1, 2013. Earnings of $1.80 per share jumped 47.5% from the year-ago quarter and comfortably surpassed the Zacks Consensus Estimate by 51 cents. This was the third consecutive quarter of positive earnings surprise with an average beat of 11.1%.
Based on the strong results, Energizer reiterated its fiscal 2013 earnings guidance in the range of $6.75 to $7.00 per share. The company expects earnings in the range of $2.75 to $3.00 in the second half of 2013 compared with $2.94 per share earned during the year-ago period
Although Energizer forecasts advertising expenses to increase in the latter half of 2013, restructuring savings are expected to increase at a much faster rate during the period. Energizer upped its restructuring outlook for fiscal 2013 to $50.0-$60.0 million from its earlier estimate of $25.0-$35.0 million.
As a result, gross savings from the restructuring project is expected to increase an additional $25.0 million to $225.0 million, of which $150.0 million is expected to be used for improving profitability, going forward.
The Zacks Consensus Estimate for fiscal 2013 increased 1.3% (9 cents) to $6.93 per share over the last 90 days. The current estimate is within the guidance range provided by Energizer. For fiscal 2014, the Zacks Consensus Estimate increased 0.5% (4 cents) to $7.61 per share over the same period.
The long-term expected earnings growth rate for Energizer is 11.0%.
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