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Reasons Why EnerSys (ENS) is an Attractive Investment Option
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EnerSys (ENS - Free Report) seems to be an attractive investment option for investors seeking exposure in manufacturing industries. It has strong fundamentals and growth prospects. Its earnings estimates too have been upwardly revised, reflecting bullish sentiments for the stock.
The company is based in Pennsylvania, and has a market capitalization of $3.1 billion. It belongs to the Zacks Manufacturing - Electronics industry, currently at the top 27% (with the rank of 67) of more than 250 Zacks industries. This industry comes under the ambit of the Zacks Industrial Products sector.
The company presently sports a Zacks Rank #1 (Strong Buy).
In the past six months, its shares gained 13.4% as compared with the industry’s growth of 9.7%.
Below we discussed why it is prudent to invest in EnerSys now.
Top-Line Tailwinds: In the quarters ahead, the company is well-poised to benefit from solid product offerings and innovation investments. Notably, the demand for its NexSys TPPL products is quite healthy.
Also, 5G infrastructure build-outs and strengthening transportation and defense businesses will likely aid EnerSys’ top line. In July 2020, the company partnered with Corning Incorporated (GLW - Free Report) to accelerate 5G deployment. This is to be done by streamlining the delivery of fiber and electrical power to small-cell wireless sites. Also, EnerSys in association with Blink Charging Co. (BLNK - Free Report) agreed to manufacture wireless (high-power) and DC fast-charging systems (equipped with integrated battery storage). This product will be used in the transportation market.
Buyouts: The company believes in enhancing product lines, expanding market share and boosting growth opportunities through acquisitions. In first-quarter fiscal 2021 (ended Jul 5, 2020), buyouts added 4% to sales growth, while the same positively impacted sales by 3% in fourth-quarter fiscal 2020 (ended March 2020).
In fiscal 2020 (ended March 2020), the company acquired NorthStar. The buyout enhanced EnerSys’ production capacities for TPPL products.
Rewards to Shareholders: The company is committed toward rewarding shareholders handsomely. Notably, it distributed dividends totaling $7.4 million in first-quarter fiscal 2021. Its quarterly dividend rate is currently pegged at 17.5 cents per share.
The company halted its share buyback activities for now due to the prevailing pandemic-related uncertainties. Notably, it bought back shares worth $34.6 million for purchasing treasury stocks in fiscal 2020.
Earnings Estimate Trend: Its earnings estimates have been revised upward in the past 30 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at $4.44 for fiscal 2021 (ending March 2021), reflecting growth of 12.4% from the 30-day-ago figure. The same for fiscal 2022 (ending March 2022) has increased 3.3% to $5.59 during the same period.
It is worth noting here that two upward revisions have been recorded for both the fiscal years in the past 30 days. There has been no downward revision in earnings estimates in the past month.
Also, the consensus estimate for the second quarter of fiscal 2021 (ending September 2021) is pegged at $1.04, reflecting growth from 88 cents in the past 30 days.
In the past 30 days, the company’s earnings estimates have improved for the current year. Also, earnings surprise for the last four quarters, on average, was 18.91%.
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This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
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Reasons Why EnerSys (ENS) is an Attractive Investment Option
EnerSys (ENS - Free Report) seems to be an attractive investment option for investors seeking exposure in manufacturing industries. It has strong fundamentals and growth prospects. Its earnings estimates too have been upwardly revised, reflecting bullish sentiments for the stock.
The company is based in Pennsylvania, and has a market capitalization of $3.1 billion. It belongs to the Zacks Manufacturing - Electronics industry, currently at the top 27% (with the rank of 67) of more than 250 Zacks industries. This industry comes under the ambit of the Zacks Industrial Products sector.
The company presently sports a Zacks Rank #1 (Strong Buy).
In the past six months, its shares gained 13.4% as compared with the industry’s growth of 9.7%.
Below we discussed why it is prudent to invest in EnerSys now.
Top-Line Tailwinds: In the quarters ahead, the company is well-poised to benefit from solid product offerings and innovation investments. Notably, the demand for its NexSys TPPL products is quite healthy.
Also, 5G infrastructure build-outs and strengthening transportation and defense businesses will likely aid EnerSys’ top line. In July 2020, the company partnered with Corning Incorporated (GLW - Free Report) to accelerate 5G deployment. This is to be done by streamlining the delivery of fiber and electrical power to small-cell wireless sites. Also, EnerSys in association with Blink Charging Co. (BLNK - Free Report) agreed to manufacture wireless (high-power) and DC fast-charging systems (equipped with integrated battery storage). This product will be used in the transportation market.
Buyouts: The company believes in enhancing product lines, expanding market share and boosting growth opportunities through acquisitions. In first-quarter fiscal 2021 (ended Jul 5, 2020), buyouts added 4% to sales growth, while the same positively impacted sales by 3% in fourth-quarter fiscal 2020 (ended March 2020).
In fiscal 2020 (ended March 2020), the company acquired NorthStar. The buyout enhanced EnerSys’ production capacities for TPPL products.
Rewards to Shareholders: The company is committed toward rewarding shareholders handsomely. Notably, it distributed dividends totaling $7.4 million in first-quarter fiscal 2021. Its quarterly dividend rate is currently pegged at 17.5 cents per share.
The company halted its share buyback activities for now due to the prevailing pandemic-related uncertainties. Notably, it bought back shares worth $34.6 million for purchasing treasury stocks in fiscal 2020.
Earnings Estimate Trend: Its earnings estimates have been revised upward in the past 30 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at $4.44 for fiscal 2021 (ending March 2021), reflecting growth of 12.4% from the 30-day-ago figure. The same for fiscal 2022 (ending March 2022) has increased 3.3% to $5.59 during the same period.
It is worth noting here that two upward revisions have been recorded for both the fiscal years in the past 30 days. There has been no downward revision in earnings estimates in the past month.
Enersys Price and Consensus
Enersys price-consensus-chart | Enersys Quote
Also, the consensus estimate for the second quarter of fiscal 2021 (ending September 2021) is pegged at $1.04, reflecting growth from 88 cents in the past 30 days.
Other Key Picks
Another top-ranked stock in the industry is Regal Beloit Corporation (RBC - Free Report) . It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, the company’s earnings estimates have improved for the current year. Also, earnings surprise for the last four quarters, on average, was 18.91%.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>