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EnerSys (ENS - Free Report) is poised to benefit from healthy business across well-diversified end markets. Energy Systems revenues are supported by product innovations like 5G, CPUC and other projects and customer wins. Robust demand in electrification and automation end markets is driving growth for the Motive Power segment. Strong momentum in aerospace and defense end markets is supporting the Specialty segment’s revenues. Also, ENS’ technological expertise and effective pricing policies are likely to drive its performance over time.
ENS is likely to become more competent on the back of its solid product portfolio over time. EnerSys is a leading provider of NexSys Thin Plate Pure Lead products in the market. ENS stands to benefit from favorable trends, including EV charging, home energy storage, rural broadband and 5G buildout products in the long-term.
EnerSys’ efforts to reward its shareholders through dividend payments and share repurchases are mention worthy. ENS paid out dividends worth $7.1 million and bought back shares worth $22.9 million in the first three months of fiscal 2023 (ended Jun 30, 2022).
However, ENS is facing challenges related to supply-chain and cost woes. In the first quarter of fiscal 2023, ENS’ cost of sales and operating expenses increased 13.9% and 2.1%, respectively. High costs are putting pressure on the company’s margin performance. Gross margin dipped 200 basis points in the fiscal first quarter. High freight costs, shortages of product components and labor constraints might weigh on EnerSys’ performance in the near term.
Given EnerSys’ global presence, it is exposed to various environmental laws and regulations in the countries it operates. Also, ENS remains vulnerable to foreign-currency and geopolitical issues. In the fiscal first quarter, forex woes hampered its revenues by 5% year over year. ENS’ overseas business might be depressed by a stronger U.S. dollar in the quarters ahead.
Image Source: Zacks Investment Research
In the past six months, this currently Zacks Rank #3 (Hold) stock has dropped 12% compared with the industry’s decline of 8.3%.
Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
AIT’s earnings estimates have increased 5.8% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have rallied 6.2% in the past six months.
Greif, Inc. (GEF - Free Report) presently has a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.4%, on average.
GEF’s earnings estimates have increased 5.1% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 18.1% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 24.4% in the past six months.
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EnerSys (ENS) Exhibits Strong Prospects Despite Headwinds
EnerSys (ENS - Free Report) is poised to benefit from healthy business across well-diversified end markets. Energy Systems revenues are supported by product innovations like 5G, CPUC and other projects and customer wins. Robust demand in electrification and automation end markets is driving growth for the Motive Power segment. Strong momentum in aerospace and defense end markets is supporting the Specialty segment’s revenues. Also, ENS’ technological expertise and effective pricing policies are likely to drive its performance over time.
ENS is likely to become more competent on the back of its solid product portfolio over time. EnerSys is a leading provider of NexSys Thin Plate Pure Lead products in the market. ENS stands to benefit from favorable trends, including EV charging, home energy storage, rural broadband and 5G buildout products in the long-term.
EnerSys’ efforts to reward its shareholders through dividend payments and share repurchases are mention worthy. ENS paid out dividends worth $7.1 million and bought back shares worth $22.9 million in the first three months of fiscal 2023 (ended Jun 30, 2022).
However, ENS is facing challenges related to supply-chain and cost woes. In the first quarter of fiscal 2023, ENS’ cost of sales and operating expenses increased 13.9% and 2.1%, respectively. High costs are putting pressure on the company’s margin performance. Gross margin dipped 200 basis points in the fiscal first quarter. High freight costs, shortages of product components and labor constraints might weigh on EnerSys’ performance in the near term.
Given EnerSys’ global presence, it is exposed to various environmental laws and regulations in the countries it operates. Also, ENS remains vulnerable to foreign-currency and geopolitical issues. In the fiscal first quarter, forex woes hampered its revenues by 5% year over year. ENS’ overseas business might be depressed by a stronger U.S. dollar in the quarters ahead.
Image Source: Zacks Investment Research
In the past six months, this currently Zacks Rank #3 (Hold) stock has dropped 12% compared with the industry’s decline of 8.3%.
Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 22.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
AIT’s earnings estimates have increased 5.8% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have rallied 6.2% in the past six months.
Greif, Inc. (GEF - Free Report) presently has a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.4%, on average.
GEF’s earnings estimates have increased 5.1% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 18.1% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 24.4% in the past six months.