Back to top

Image: Shutterstock

Here's Why Spectrum Brands (SPB) is Marching Ahead of Industry

Read MoreHide Full Article

Despite continued COVID-related disruptions, Spectrum Brands Holdings, Inc. (SPB - Free Report) seems to be an appropriate investment option as its shares have outperformed the industry and the overall Consumer Discretionary sector in the past three months. This Zacks Rank #2 (Buy) stock has rallied 15.5% compared with the industry’s growth of 11.3% and against the sector’s decline of 0.8%.

The stock’s bullish run on the bourses can be attributable to the better-than-expected first-quarter fiscal 2021 results, wherein both the top and bottom lines improved year over year. Results gained from solid demand for its products, which drove growth in all business categories. Also, enhanced brand awareness, investments in advertising and marketing, and supply-chain recovery contributed to quarterly growth. Encouragingly, management lifted the fiscal 2021 sales view from 3-5% to high-single digits, with a slightly favorable impact from foreign exchange.

Further, strength in Global Pet Care Business acts as a key growth driver. In the fiscal first quarter, sales for the segment improved 33.9%, driven by growth in aquatic and companion animal categories along with solid online sales. Also, strong e-commerce sales along with a spike in demand for aquatics and reptile kits and equipment contributed to segment growth.

Moving on, the company is on track with its plans to tap into the aquatics and reptile space. In this context, Spectrum Brands is progressing well with the integration process of its newly acquired Omega Sea, which is now part of its Global Pet Care portfolio of aquatic brands. Moreover, it is making efforts to strengthen its leadership in the dog chews category via the acquisition of Armitage Pet Care. Cumulatively, the pet segment remains poised for growth, backed by its pipeline of robust innovation and growth strategy.

Apart from these, the company remains on track with its Global Productivity Improvement Plan (GPIP), which aims at improving the company’s operating efficiency and effectiveness, while focusing on consumer insights, and growth-enabling functions, including technology, marketing, and research and development (R&D). Gains from the plan contributed to Spectrum Brands’ first-quarter fiscal 2021 results.

The company raised its savings target for the global productivity improvement plan to $150 million. Notably, the majority of these savings are expected to be reinvested into the growth initiatives and consumer insights, R&D, and marketing across each of the businesses.

 

 

Wrapping Up

All said, we believe that Spectrum Brands is likely to sustain its stellar show, driven by robust demand in the pet segment, contributions from the global productivity improvement plan and a positive fiscal 2021 view.

Other Stocks to Consider

Crocs (CROX - Free Report) , a Zacks Rank #1 (Strong Buy) stock, has an impressive long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deckers Outdoor Corporation (DECK - Free Report) has a long-term earnings growth rate of 21.5% and a Zacks Rank #2 at present.

Prestige Consumer Healthcare (PBH - Free Report) has an expected long-term earnings growth rate of 4%. Also, the company currently has a Zacks Rank #2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.

Click here for the 4 trades >>

Published in