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Enersys (ENS) Gives Update on IRC 45X Tax Benefits, Q3 View Up
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Enersys (ENS - Free Report) recently updated its previously provided third-quarter fiscal 2024 outlook, considering the impacts of the U.S. Department of the Treasury’s proposed regulations regarding the Advanced Manufacturing Production Credit - Section 45X of the Internal Revenue Code. Enersys expects the effects of the proposed regulations to result in higher product sales than earlier projections and make it eligible for the related tax credits.
The company currently anticipates annual tax credits, which are noted as a decrease in the cost of goods sold, in the band of $120-$160 million. This reflects an annual increase of $35-$45 million to the company’s expected tax credits from its previously projected annual range of $80-$120 million.
Considering impacts from the U.S. Department of the Treasury’s proposed regulations, Enersys currently anticipates generating an adjusted diluted earnings per share between $2.50 and $2.60 for third-quarter fiscal 2024. This includes an adjustment related to the retroactive impacts of the incremental IRC 45X tax benefits. The figure compares favorably with the previously estimated range of $1.80-$1.90.
As noted, Enersys remains committed to implementing strategic initiatives to achieve its long-term targets. The company believes that the proposed regulations will support its domestic investments in technology and operations that would enable it to offer efficient and innovative solutions to its customers.
Existing Business Scenario
The decrease in capital spending of the telecommunication and broadband customers is adversely affecting Enersys’ Energy Systems segment. The segment’s revenues were down 3.3% in the second quarter of fiscal 2024, year over year. Also, TPPL capacity constraints and the closure of the Sylmar plant are affecting the Specialty segment.
Over the past six months, the Zacks Rank #4 (Sell) company has lost 6.7% against the industry’s growth of 11.9%.
Image Source: Zacks Investment Research
However, its Motive Power segment’s sales are driven by improvements in pricing and a favorable sales mix. The segment’s revenues increased 5.1% year over year in the fiscal second quarter.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has increased 3.7%. The stock has rallied 38.7% in the past six months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has increased 2.5% in the past 60 days. Shares of the company have gained 9.5% in the past six months.
Kadant delivered a trailing four-quarter average earnings surprise of 17.3%. In the past 60 days, the consensus estimate for KAI’s 2023 earnings has improved 5.2%. The stock has risen 23.2% in the past six months.
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Enersys (ENS) Gives Update on IRC 45X Tax Benefits, Q3 View Up
Enersys (ENS - Free Report) recently updated its previously provided third-quarter fiscal 2024 outlook, considering the impacts of the U.S. Department of the Treasury’s proposed regulations regarding the Advanced Manufacturing Production Credit - Section 45X of the Internal Revenue Code. Enersys expects the effects of the proposed regulations to result in higher product sales than earlier projections and make it eligible for the related tax credits.
The company currently anticipates annual tax credits, which are noted as a decrease in the cost of goods sold, in the band of $120-$160 million. This reflects an annual increase of $35-$45 million to the company’s expected tax credits from its previously projected annual range of $80-$120 million.
Considering impacts from the U.S. Department of the Treasury’s proposed regulations, Enersys currently anticipates generating an adjusted diluted earnings per share between $2.50 and $2.60 for third-quarter fiscal 2024. This includes an adjustment related to the retroactive impacts of the incremental IRC 45X tax benefits. The figure compares favorably with the previously estimated range of $1.80-$1.90.
As noted, Enersys remains committed to implementing strategic initiatives to achieve its long-term targets. The company believes that the proposed regulations will support its domestic investments in technology and operations that would enable it to offer efficient and innovative solutions to its customers.
Existing Business Scenario
The decrease in capital spending of the telecommunication and broadband customers is adversely affecting Enersys’ Energy Systems segment. The segment’s revenues were down 3.3% in the second quarter of fiscal 2024, year over year. Also, TPPL capacity constraints and the closure of the Sylmar plant are affecting the Specialty segment.
Over the past six months, the Zacks Rank #4 (Sell) company has lost 6.7% against the industry’s growth of 11.9%.
Image Source: Zacks Investment Research
However, its Motive Power segment’s sales are driven by improvements in pricing and a favorable sales mix. The segment’s revenues increased 5.1% year over year in the fiscal second quarter.
3 Promising Stocks
We have highlighted three better-ranked stocks, namely Crane Company (CR - Free Report) , Flowserve Corporation (FLS - Free Report) and Kadant Inc. (KAI - Free Report) . While Crane sports a Zacks Rank #1 (Strong Buy), Flowserve and Kadant, each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has increased 3.7%. The stock has rallied 38.7% in the past six months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has increased 2.5% in the past 60 days. Shares of the company have gained 9.5% in the past six months.
Kadant delivered a trailing four-quarter average earnings surprise of 17.3%. In the past 60 days, the consensus estimate for KAI’s 2023 earnings has improved 5.2%. The stock has risen 23.2% in the past six months.