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Prestige Consumer Healthcare Inc. (PBH - Free Report) appears to be on firm footing, thanks to its robust e-commerce business and efforts to curtail costs. These upsides were visible in the company’s third-quarter fiscal 2021 results, wherein management also raised its guidance for fiscal 2021.
Impressively, this Zacks Rank #2 (Buy) stock has rallied 21.4% in the past three months, outpacing the industry’s growth of 6.7%. Also, this developer, manufacturer, marketer, seller and distributor of over-the-counter healthcare products has outshined the Zacks Consumer Discretionary sector and the S&P 500’s respective gains of 8.9% and 5.3% in the same time frame. Let’s delve deeper.
Strong Q3 Results Lead to Encouraging View
During the third quarter, both earnings and sales surpassed the Zacks Consensus Estimate. This marks the company’s eighth straight beat (on a combined basis). Notably, adjusted earnings of 81 cents per share surpassed the Zacks Consensus Estimate of 77 cents. This marked its twelfth consecutive quarter of earnings beat. Though sales were hurt by lower consumption for certain product categories amid the pandemic, the company benefited from stable consumption trends in most parts of the portfolio. Also, adjusted gross margin and adjusted EBITDA margin improved year over year.
Management remains impressed with its first nine-month performance of fiscal 2021. The company said that its long-term brand as well as channel investments, together with its diversified portfolio helped it win market share in several key categories, alongside driving triple-digit e-commerce growth. Robust operating results and performance to date encouraged management to raise its top- and bottom-line guidance for fiscal 2021. Management expects its year-to-date domestic trends to continue. Also, it expects continued enhancements in the International unit. Management projects its solid operating structure to aid high-single-digit earnings growth in fiscal 2021.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
In fiscal 2021, adjusted earnings per share are envisioned to be $3.22 compared with the previous view of $3.18. In fiscal 2020, Prestige Consumer’s bottom line came in at $2.96 per share. The company remains well placed for an even stronger performance in fiscal 2022. Notably, management remains focused on strengthening its brand portfolio to drive sales. These efforts, together with a strong financial status and efficient capital allocation, are expected to drive shareholder value in the long term. Importantly, the Zacks Consensus Estimate for earnings in the fourth quarter and fiscal 2021 have gone up from 77 cents to 79 cents and from $3.18 to $3.24, respectively, over the past 30 days.
What’s Driving Prestige Consumer?
Prestige Consumer has been making e-commerce investments for a while now, which continued to yield results in the third quarter of fiscal 2021. Management, in its third-quarter earnings call, said that e-commerce consumption for Prestige Consumer grew in strong triple digits year to date, given consumers continued shift to online shopping. Incidentally, a number of the company’s brands have a greater share in the e-commerce channel compared with brick and mortar. With more consumers shifting to the online mode of shopping, especially amid the pandemic-led social distancing, the e-commerce channel is likely to remain strong.
Further, the company has been looking to reduce its advertising and marketing (A&M) costs, which as a percentage of sales came in at 15.9% in the third quarter of fiscal 2021, down from 16.1% in the second quarter. Management expects this metric to be just under 15% for fiscal 2021, as it remains committed to a normalized spending rate. Apart from this, the company expects G&A expenses for the full fiscal to be lower than the year-ago levels (in dollar terms). Certainly, the company’s saving efforts have been yielding as its adjusted EBITDA margin expanded 10 bps to 34.1% in the quarter under review.
With such solid endeavors in place, Prestige Consumer is set to keep its growth story going.
Crocs (CROX - Free Report) currently has a Zacks Rank #1 and a long-term earnings growth rate of 15%.
Delta Apparel (DLA - Free Report) , with a Zacks Rank #1, has delivered earnings surprises in the last three quarters.
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The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early. See the 5 high-tech stocks now>>
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Here's Why Prestige Consumer (PBH) Stock Appears Promising
Prestige Consumer Healthcare Inc. (PBH - Free Report) appears to be on firm footing, thanks to its robust e-commerce business and efforts to curtail costs. These upsides were visible in the company’s third-quarter fiscal 2021 results, wherein management also raised its guidance for fiscal 2021.
Impressively, this Zacks Rank #2 (Buy) stock has rallied 21.4% in the past three months, outpacing the industry’s growth of 6.7%. Also, this developer, manufacturer, marketer, seller and distributor of over-the-counter healthcare products has outshined the Zacks Consumer Discretionary sector and the S&P 500’s respective gains of 8.9% and 5.3% in the same time frame. Let’s delve deeper.
Strong Q3 Results Lead to Encouraging View
During the third quarter, both earnings and sales surpassed the Zacks Consensus Estimate. This marks the company’s eighth straight beat (on a combined basis). Notably, adjusted earnings of 81 cents per share surpassed the Zacks Consensus Estimate of 77 cents. This marked its twelfth consecutive quarter of earnings beat. Though sales were hurt by lower consumption for certain product categories amid the pandemic, the company benefited from stable consumption trends in most parts of the portfolio. Also, adjusted gross margin and adjusted EBITDA margin improved year over year.
Management remains impressed with its first nine-month performance of fiscal 2021. The company said that its long-term brand as well as channel investments, together with its diversified portfolio helped it win market share in several key categories, alongside driving triple-digit e-commerce growth. Robust operating results and performance to date encouraged management to raise its top- and bottom-line guidance for fiscal 2021. Management expects its year-to-date domestic trends to continue. Also, it expects continued enhancements in the International unit. Management projects its solid operating structure to aid high-single-digit earnings growth in fiscal 2021.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
Prestige Consumer Healthcare Inc. price-consensus-eps-surprise-chart | Prestige Consumer Healthcare Inc. Quote
In fiscal 2021, adjusted earnings per share are envisioned to be $3.22 compared with the previous view of $3.18. In fiscal 2020, Prestige Consumer’s bottom line came in at $2.96 per share. The company remains well placed for an even stronger performance in fiscal 2022. Notably, management remains focused on strengthening its brand portfolio to drive sales. These efforts, together with a strong financial status and efficient capital allocation, are expected to drive shareholder value in the long term. Importantly, the Zacks Consensus Estimate for earnings in the fourth quarter and fiscal 2021 have gone up from 77 cents to 79 cents and from $3.18 to $3.24, respectively, over the past 30 days.
What’s Driving Prestige Consumer?
Prestige Consumer has been making e-commerce investments for a while now, which continued to yield results in the third quarter of fiscal 2021. Management, in its third-quarter earnings call, said that e-commerce consumption for Prestige Consumer grew in strong triple digits year to date, given consumers continued shift to online shopping. Incidentally, a number of the company’s brands have a greater share in the e-commerce channel compared with brick and mortar. With more consumers shifting to the online mode of shopping, especially amid the pandemic-led social distancing, the e-commerce channel is likely to remain strong.
Further, the company has been looking to reduce its advertising and marketing (A&M) costs, which as a percentage of sales came in at 15.9% in the third quarter of fiscal 2021, down from 16.1% in the second quarter. Management expects this metric to be just under 15% for fiscal 2021, as it remains committed to a normalized spending rate. Apart from this, the company expects G&A expenses for the full fiscal to be lower than the year-ago levels (in dollar terms). Certainly, the company’s saving efforts have been yielding as its adjusted EBITDA margin expanded 10 bps to 34.1% in the quarter under review.
With such solid endeavors in place, Prestige Consumer is set to keep its growth story going.
Other Solid Consumer Discretionary Picks
Spectrum Brands (SPB - Free Report) , with a Zacks Rank #1 (Strong Buy), has seen its bottom line outpaced the Zacks Consensus Estimate by a significant margin over the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Crocs (CROX - Free Report) currently has a Zacks Rank #1 and a long-term earnings growth rate of 15%.
Delta Apparel (DLA - Free Report) , with a Zacks Rank #1, has delivered earnings surprises in the last three quarters.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>