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Prestige Consumer (PBH) Well Poised on Solid Brand, E-Commerce
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Prestige Consumer Healthcare Inc. (PBH - Free Report) appears to be well-positioned for growth. The company has been benefiting from its vast brand portfolio, especially its strength in certain categories. Undoubtedly, a focus on prudent acquisitions is also driving this provider of over-the-counter (OTC) healthcare products. Gains from these factors and e-commerce strength were visible in Prestige Consumer’s third-quarter fiscal 2022 results.
During the quarter, both the top and bottom lines beat the Zacks Consensus Estimate and grew year over year and management raised its view for the fiscal. The Zacks Consensus Estimate for fiscal 2022 earnings per share (EPS) has risen from $3.95 to $4.04 over the past 60 days. Also, shares of this Zacks Rank #3 (Hold) company have increased 4.8% in the past six months against the industry’s decline of 40.4%.
Let’s delve deeper and see if these upsides can help PBH’s growth story going amid cost challenges.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
The company’s third quarter continued the solid momentum witnessed in the first half. Prestige Consumer benefited from its vast brand portfolio, which helped it register a double-digit revenue increase in several areas, including the greater-than-anticipated recovery in pandemic-impacted areas (like cough & cold), solid international revenues (particularly due to Australia) and the overall strength in domestic consumer healthcare demand.
Management’s focus on areas that have greater growth prospects has been working well. In this regard, the company recently acquired TheraTears and four other OTC consumer brands across the VMS and Cough & Cold categories from Akorn Operating Company LLC. This buyout, concluded in July 2021, contributed to Prestige Consumer’s third-quarter results. Management earlier said that it expects the Akorn acquisition to contribute $40 million to the top line in fiscal 2022. The addition of TheraTears is likely to enhance Prestige Consumer’s footing in the eye care space.
Moving on, Prestige Consumer has been making multi-year e-commerce investments for a while now, which continued to yield results in the third quarter of fiscal 2022. The company continued to see double-digit consumption growth in e-commerce sales during the quarter. The upside can be attributed to consumers’ growing shift to online shopping as well as the company’s constant investments in online content and digital marketing. With more consumers shifting to the online mode of shopping, the e-commerce channel is likely to remain strong and PBH’s investments in this arena are likely to keep the company well-placed.
Image Source: Zacks Investment Research
A Closer Look at Q3 & Beyond
Prestige Consumer posted earnings of 99 cents per share, which surpassed the Zacks Consensus Estimate of 89 cents. The bottom line advanced 22.2% year over year. Total revenues grew 14.9% to $274.5 million and beat the Zacks Consensus Estimate of $260 million. Excluding currency impacts and contributions from the Akorn buyout, revenues rose 8.8%. Revenues were backed by the strength in key brands as well as improved demand across certain categories, brands and channels that were hurt by the pandemic in the year-ago period (such as cold & cough products). Revenues grew in the North American OTC Healthcare and International OTC Healthcare segments due to a demand spike.
Driven by impressive quarterly results and the anticipation of the continued recovery of certain pandemic-impacted categories like cough & cold (as seen in the third quarter), management raised its fiscal 2022 view. Prestige Consumer’s solid brand portfolio, strict capital deployment and strong financial profile keep it well-placed for top and bottom-line growth in fiscal 2023. For fiscal 2022, PBH anticipates revenues in the range of $1,075-$1,080 million, up from the earlier-mentioned view of $1,050-$1,060 million. Organic growth is projected at 9% now compared with the previous guidance of 7%. Finally, the company envisions adjusted EPS in the band of $4-$4.04, up from the $3.93-$3.98 range mentioned before. In fiscal 2021, Prestige Consumer’s top and bottom lines were $943.4 million and $3.24 per share, respectively.
Will Cost Woes be Offset?
Prestige Consumer is encountering hurdles related to supply-chain restrictions as well as cost inflation. For fiscal 2022, management expects a gross margin of about 57%, which suggests supply-chain hurdles as well as cost-related challenges. However, the company is focused on undertaking price increases to combat inflation. This, along with the abovementioned upsides, is likely to keep Prestige Consumer on the growth trajectory.
Funko, the pop culture consumer products company, currently carries a Zacks Rank #1 (Strong Buy). Shares of Funko have declined 9.9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Funko’s 2022 sales and EPS suggests growth of 22.7% and 26.8%, respectively, from the year-ago reported figure. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average.
Central Garden & Pet, which produces and distributes various products for the lawn and garden and pet supplies markets, carries a Zacks Rank #2 (Buy) at present. Shares of Central Garden & Pet have moved down 1.4% in the past six months.
The Zacks Consensus Estimate for Central Garden & Pet’s fiscal 2022 sales and EPS suggests growth of 4.7% and 7.2%, respectively, from the year-ago reported number. CENT has a trailing four-quarter earnings surprise of 409.6%, on average.
Gildan Activewear, which manufactures and sells various apparel products, carries a Zacks Rank #2 at present. Shares of Gildan Activewear have dipped 2.9% in the past six months.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the year-ago reported figure. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.
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Prestige Consumer (PBH) Well Poised on Solid Brand, E-Commerce
Prestige Consumer Healthcare Inc. (PBH - Free Report) appears to be well-positioned for growth. The company has been benefiting from its vast brand portfolio, especially its strength in certain categories. Undoubtedly, a focus on prudent acquisitions is also driving this provider of over-the-counter (OTC) healthcare products. Gains from these factors and e-commerce strength were visible in Prestige Consumer’s third-quarter fiscal 2022 results.
During the quarter, both the top and bottom lines beat the Zacks Consensus Estimate and grew year over year and management raised its view for the fiscal. The Zacks Consensus Estimate for fiscal 2022 earnings per share (EPS) has risen from $3.95 to $4.04 over the past 60 days. Also, shares of this Zacks Rank #3 (Hold) company have increased 4.8% in the past six months against the industry’s decline of 40.4%.
Let’s delve deeper and see if these upsides can help PBH’s growth story going amid cost challenges.
Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise
Prestige Consumer Healthcare Inc. price-consensus-eps-surprise-chart | Prestige Consumer Healthcare Inc. Quote
What’s Working for Prestige Consumer?
The company’s third quarter continued the solid momentum witnessed in the first half. Prestige Consumer benefited from its vast brand portfolio, which helped it register a double-digit revenue increase in several areas, including the greater-than-anticipated recovery in pandemic-impacted areas (like cough & cold), solid international revenues (particularly due to Australia) and the overall strength in domestic consumer healthcare demand.
Management’s focus on areas that have greater growth prospects has been working well. In this regard, the company recently acquired TheraTears and four other OTC consumer brands across the VMS and Cough & Cold categories from Akorn Operating Company LLC. This buyout, concluded in July 2021, contributed to Prestige Consumer’s third-quarter results. Management earlier said that it expects the Akorn acquisition to contribute $40 million to the top line in fiscal 2022. The addition of TheraTears is likely to enhance Prestige Consumer’s footing in the eye care space.
Moving on, Prestige Consumer has been making multi-year e-commerce investments for a while now, which continued to yield results in the third quarter of fiscal 2022. The company continued to see double-digit consumption growth in e-commerce sales during the quarter. The upside can be attributed to consumers’ growing shift to online shopping as well as the company’s constant investments in online content and digital marketing. With more consumers shifting to the online mode of shopping, the e-commerce channel is likely to remain strong and PBH’s investments in this arena are likely to keep the company well-placed.
Image Source: Zacks Investment Research
A Closer Look at Q3 & Beyond
Prestige Consumer posted earnings of 99 cents per share, which surpassed the Zacks Consensus Estimate of 89 cents. The bottom line advanced 22.2% year over year. Total revenues grew 14.9% to $274.5 million and beat the Zacks Consensus Estimate of $260 million. Excluding currency impacts and contributions from the Akorn buyout, revenues rose 8.8%. Revenues were backed by the strength in key brands as well as improved demand across certain categories, brands and channels that were hurt by the pandemic in the year-ago period (such as cold & cough products). Revenues grew in the North American OTC Healthcare and International OTC Healthcare segments due to a demand spike.
Driven by impressive quarterly results and the anticipation of the continued recovery of certain pandemic-impacted categories like cough & cold (as seen in the third quarter), management raised its fiscal 2022 view. Prestige Consumer’s solid brand portfolio, strict capital deployment and strong financial profile keep it well-placed for top and bottom-line growth in fiscal 2023. For fiscal 2022, PBH anticipates revenues in the range of $1,075-$1,080 million, up from the earlier-mentioned view of $1,050-$1,060 million. Organic growth is projected at 9% now compared with the previous guidance of 7%. Finally, the company envisions adjusted EPS in the band of $4-$4.04, up from the $3.93-$3.98 range mentioned before. In fiscal 2021, Prestige Consumer’s top and bottom lines were $943.4 million and $3.24 per share, respectively.
Will Cost Woes be Offset?
Prestige Consumer is encountering hurdles related to supply-chain restrictions as well as cost inflation. For fiscal 2022, management expects a gross margin of about 57%, which suggests supply-chain hurdles as well as cost-related challenges. However, the company is focused on undertaking price increases to combat inflation. This, along with the abovementioned upsides, is likely to keep Prestige Consumer on the growth trajectory.
Consumer Discretionary Stocks Worth Noting
Some better-ranked stocks are Funko, Inc. (FNKO - Free Report) , Central Garden & Pet Company (CENT - Free Report) and Gildan Activewear Inc. (GIL - Free Report) .
Funko, the pop culture consumer products company, currently carries a Zacks Rank #1 (Strong Buy). Shares of Funko have declined 9.9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Funko’s 2022 sales and EPS suggests growth of 22.7% and 26.8%, respectively, from the year-ago reported figure. FNKO has a trailing four-quarter earnings surprise of 96.2%, on average.
Central Garden & Pet, which produces and distributes various products for the lawn and garden and pet supplies markets, carries a Zacks Rank #2 (Buy) at present. Shares of Central Garden & Pet have moved down 1.4% in the past six months.
The Zacks Consensus Estimate for Central Garden & Pet’s fiscal 2022 sales and EPS suggests growth of 4.7% and 7.2%, respectively, from the year-ago reported number. CENT has a trailing four-quarter earnings surprise of 409.6%, on average.
Gildan Activewear, which manufactures and sells various apparel products, carries a Zacks Rank #2 at present. Shares of Gildan Activewear have dipped 2.9% in the past six months.
The Zacks Consensus Estimate for Gildan Activewear’s 2022 sales and EPS suggests growth of 8.9% and 3.3%, respectively, from the year-ago reported figure. GIL has a trailing four-quarter earnings surprise of 66.6%, on average.