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EnerSys (ENS) Provides Preliminary Results for Fiscal Q4

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EnerSys (ENS - Free Report) yesterday discussed preliminary results for fourth-quarter fiscal 2021 (ended March 2021). It noted that fiscal-fourth quarter’s results might have benefited from improvement in demand environment with recovery in end markets. Also, the company provided earnings outlook for first-quarter fiscal 2022 (ending June 2021).

It is worth mentioning that the company’s share price increased 1% yesterday, ending the trading session at $90.39.

Inside the Headlines

For fourth-quarter fiscal 2021, EnerSys anticipates revenues of $813.5 million, suggesting an improvement of 4% and 8% on a year-over-year and sequential basis, respectively. Notably, the year-over-year increase is primarily attributable to 4% growth in organic volume, 2% positive impact from movements in foreign currencies, partially offset by 2% negative impact from decline in pricing. The sequential rise indicates 9% growth in organic volume, partially offset by 1% negative impact from decline in pricing.

On a segmental basis, Energy Systems’ sales are projected to be $348.8 million, whereas the same for Motive Power and Specialty are anticipated to be $332.8 million and $131.9, respectively.

Adjusted earnings for the quarter are anticipated to be $1.30, within the guidance of $1.25-$1.31 issued by the company in February 2021. The figure suggests an improvement of 17.1% and 2.4% on year-over-year and sequential basis, respectively.

Gross margin for the quarter is expected to be 24%. Operating expenses might be $124.9 million, suggesting a decline of 6.7% year over year.

Exiting the fiscal fourth quarter, the company’s leverage ratio is predicted to be 1.7 and long-term debt (net of unamortized debt issuance costs) is likely to be $969.6 million. Its cash and cash equivalents are expected to be $451.8 million, suggesting an increase of 38.2% year over year.

For fiscal 2021, the company projects its revenues to be $2,977.9 million, suggesting a decline of 3.6% on a year-over-year basis. Notably, the year-over-year fall is primarily attributable to 5% decline in organic volume and 1% negative impact from decline in pricing, partially offset by 2% favorable impact its NorthStar acquisition.

Adjusted earnings are anticipated to be $4.49, implying a decline of 4.1% year over year.

Cash flow from operations is likely to be $358.4 million for the fiscal year, reflecting an increase of 41.4% from the previous fiscal year. Capital expenditures are expected to be $70 million, down from $101.4 million recorded in fiscal 2020.

For first-quarter fiscal 2022, EnerSys currently expects adjusted earnings to lie in the range of $1.15-$1.25.

Though uncertainties related to the coronavirus outbreak persist, EnerSys anticipates gaining from solid product offerings, improved demand environment as well as its focus on supply chain measures in the quarters ahead.

Concurrently, the company’s board of directors approved the pay out of a quarterly cash dividend of 17.5 cents per share to shareholders on record as of Jun 11. The disbursement will be made on Jun 25.

Zacks Rank, Earnings Estimates and Price Performance

EnerSys, with a market capitalization of $3.9 billion, currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have moved down 1% against the industry’s growth of 2.2%.

The Zacks Consensus Estimate for its earnings per share is pegged at $4.48 for fiscal 2021 and $5.50 for fiscal 2022 (ending March 2022), remaining stable in the past 30 days.

Key Picks

Some better-ranked stocks from the same space are A. O. Smith Corporation (AOS - Free Report) , Eaton Corporation, plc (ETN - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A. O. Smith delivered an earnings surprise of 14.84%, on average, in the trailing four quarters.

Eaton delivered an earnings surprise of 16.78%, on average, in the trailing four quarters.

Franklin Electric delivered an earnings surprise of 25.39%, on average, in the trailing four quarters.

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