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Helen of Troy (HELE) Displays Bright Prospects, Risks Persist
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Helen of Troy Limited (HELE - Free Report) remains focused on investing in consumer-centric innovation, digital marketing and media, enhanced production and distribution and direct-to-consumer channels, among others.
Management has also been investing in key growth areas as part of its Phase II Transformation efforts, which commenced in fiscal 2019. HELE’s core net sales increased, witnessing a 9.1% CAGR since the beginning of Phase II, well ahead of its target. Also, its core adjusted earnings per share grew, seeing a 6.8% CAGR during the same time frame.
Helen of Troy believes in strengthening its businesses through the addition of assets. It closed the buyout of Recipe Products Ltd. in April 2022. Recipe Products’ Curlsmith products have been proving to be category leaders in the fast-growing prestige haircare products market. The company’s acquisition of Osprey Packs in December 2021 has been proving beneficial. Also, it completed the buyout of Drybar Products in January 2020. Notably, acquisitions contributed 3.4% to revenue growth in fourth-quarter fiscal 2023.
Under Project Pegasus, the company remains committed to optimizing its brand portfolio, streamlining and simplifying the organization, growing cost management projects and improving the efficiency of its supply-chain network. Further, the project aims at streamlining indirect spending and improving cash flow and working capital.
However, it has been witnessing a tough operating landscape, including a shift in consumer spending patterns and lower order levels from retail customers. For instance, in the fiscal fourth quarter, its net sales tumbled 16.7% year-over-year to $484.6 million. The downside was a result of softness in the organic business to the tune of 19.8% stemming from reduced consumer demand. Owing to these headwinds, management projected its net sales to decline by 9-7% and 7-5% in the first and second quarters of fiscal 2024, respectively.
Although the company’s consolidated gross profit margin inched up in the fiscal fourth quarter, it continued to bear the brunt of cost inflation. The metric was hurt by an unfavorable product mix and channel mix, as well as an increase in inventory obsolescence costs. For fiscal 2024, it expects additional year-over-year expenses related to the restoration of annual incentive compensation expenses and increased interest and depreciation expenses.
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) stock has returned 0.7% against the industry’s decline of 16.6%.
Celsius Holdings specializes in commercializing healthier, nutritional foods, beverages and dietary supplements. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 70.4% growth, while earnings per share are expected to rise by 154% from the corresponding year-ago reported figures. The company’s earnings surprise in the last reported quarter was 81.8%.
Conagra Brands operates as a leading branded food company in North America. The Zacks Consensus Estimate for CAG’s current financial-year sales and earnings per share suggests growth of 7.1% and 17%, respectively, from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 13.2%, on average.
Barfresh Food manufactures and distributes ready-to-blend beverages. The company’s earnings surprise in the last reported quarter was 0%. The Zacks Consensus Estimate for BRFH’s current financial year sales suggests growth of 33.8%, while earnings are likely to grow 53.7%, from the prior-year reported numbers.
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Helen of Troy (HELE) Displays Bright Prospects, Risks Persist
Helen of Troy Limited (HELE - Free Report) remains focused on investing in consumer-centric innovation, digital marketing and media, enhanced production and distribution and direct-to-consumer channels, among others.
Management has also been investing in key growth areas as part of its Phase II Transformation efforts, which commenced in fiscal 2019. HELE’s core net sales increased, witnessing a 9.1% CAGR since the beginning of Phase II, well ahead of its target. Also, its core adjusted earnings per share grew, seeing a 6.8% CAGR during the same time frame.
Helen of Troy believes in strengthening its businesses through the addition of assets. It closed the buyout of Recipe Products Ltd. in April 2022. Recipe Products’ Curlsmith products have been proving to be category leaders in the fast-growing prestige haircare products market. The company’s acquisition of Osprey Packs in December 2021 has been proving beneficial. Also, it completed the buyout of Drybar Products in January 2020. Notably, acquisitions contributed 3.4% to revenue growth in fourth-quarter fiscal 2023.
Under Project Pegasus, the company remains committed to optimizing its brand portfolio, streamlining and simplifying the organization, growing cost management projects and improving the efficiency of its supply-chain network. Further, the project aims at streamlining indirect spending and improving cash flow and working capital.
However, it has been witnessing a tough operating landscape, including a shift in consumer spending patterns and lower order levels from retail customers. For instance, in the fiscal fourth quarter, its net sales tumbled 16.7% year-over-year to $484.6 million. The downside was a result of softness in the organic business to the tune of 19.8% stemming from reduced consumer demand. Owing to these headwinds, management projected its net sales to decline by 9-7% and 7-5% in the first and second quarters of fiscal 2024, respectively.
Although the company’s consolidated gross profit margin inched up in the fiscal fourth quarter, it continued to bear the brunt of cost inflation. The metric was hurt by an unfavorable product mix and channel mix, as well as an increase in inventory obsolescence costs. For fiscal 2024, it expects additional year-over-year expenses related to the restoration of annual incentive compensation expenses and increased interest and depreciation expenses.
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) stock has returned 0.7% against the industry’s decline of 16.6%.
3 Key Picks
Some better-ranked stocks are Celsius Holdings, Inc. (CELH - Free Report) , Conagra Brands, Inc. (CAG - Free Report) and Barfresh Food Group, Inc. (BRFH - Free Report) . While CELH sports a Zacks Rank #1 (Strong Buy), CAG and BRFH carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Celsius Holdings specializes in commercializing healthier, nutritional foods, beverages and dietary supplements. The Zacks Consensus Estimate for CELH’s current financial-year sales suggests 70.4% growth, while earnings per share are expected to rise by 154% from the corresponding year-ago reported figures. The company’s earnings surprise in the last reported quarter was 81.8%.
Conagra Brands operates as a leading branded food company in North America. The Zacks Consensus Estimate for CAG’s current financial-year sales and earnings per share suggests growth of 7.1% and 17%, respectively, from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 13.2%, on average.
Barfresh Food manufactures and distributes ready-to-blend beverages. The company’s earnings surprise in the last reported quarter was 0%. The Zacks Consensus Estimate for BRFH’s current financial year sales suggests growth of 33.8%, while earnings are likely to grow 53.7%, from the prior-year reported numbers.