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Reasons to Buy Prestige Consumer (PBH) Stock for Now
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Prestige Consumer Healthcare (PBH - Free Report) is likely to grow in the coming quarters, backed by its diverse portfolio of consumer brands, which serves as a strong testament to delivering record revenues and consistent EBITDA margins. The company emphasizes brand-building and product innovation in niche consumer healthcare categories to better improve the lives of its consumers. Moreover, early investments in the ecommerce channel bode well for the company.
However, a high inflationary environment and competitive pressures may pose constraints for Prestige Consumer’s operations.
In the past year, this Zacks Rank #2 (Buy) stock has declined 2.9% against a 2.3% rise of the industry and the 24.7% growth of the S&P 500 composite.
The renowned consumer healthcare product company has a market capitalization of $3.06 billion. Prestige Consumer has an earnings yield of 6.98% compared with the industry’s -1.65%. PBH’s earnings surpassed estimates in three of the trailing four quarters and broke even in one, delivering an average surprise of 2.7%.
Let’s delve deeper.
Upsides
Strength of a Diversified Portfolio: Prestige Consumer owns and markets a diverse portfolio of well-recognized consumer brands, a few of which date back more than 100 years. The majority of the company’s core brands, including Monistat, Summer's Eve, Nix, TheraTears and Dramamine, together accounted for approximately 81.9% of the total revenues in fiscal 2023.
Image Source: Zacks Investment Research
The company has leveraged these wide arrays of diversified brands across many categories, which delivered record revenues and consistent EBITDA margins. Over the years, the company has expanded its brand portfolio both organically and through acquisitions. Having a strong and diverse portfolio of products has provided Prestige Consumer with multiple sources of growth and minimized the impact of any individual category slowdowns.
Focus on Brand-Building: Prestige Consumer’s long-term brand-building efforts, combined with efficient marketing, channel development and innovation that drive long-term brand and category growth, have led the company’s brands to continually hold the leading market share position.
The company acquired the brand Goody’s more than 10 years ago, successfully leveraged insights from consumers and expanded with targeted offerings like Goody's Hangover to meet ever-evolving product needs and preferences. Another iconic franchise, Dramamine, has been successfully using numerous brand-building tactics to grow with consumers.
Recently, the company began addressing the distinctive nausea market with new Dramamine nausea offerings, where it now remains a leader in the category. The Nix brand has also gradually expanded its product assortment with consumers over time, supported by effective marketing to capitalize on category incident levels.
E-Commerce Strength: In the first half of the fiscal year 2024, the company experienced strong 6% consumption growth across the ecommerce channel, simultaneously maintaining a consistent profit profile across all its distribution channels. These impressive wins with consumers across e-commerce, through investments in online content and digital advertising, have positioned PBH for further growth.
Downsides
Debt Profile: At the end of the fiscal second quarter, Prestige Consumer had a long-term debt of $1.26 billion against the corresponding cash and cash equivalents (net of current debt) of $60.1 million. The debt to capital ratio stood moderately leveraged at 45.1%, while times interest earned remained sequentially unchanged at negative 0.3. This suggests that the company might face difficulty in paying off its interest obligations.
Cost Woes: Economic conditions in both the United States and globally have been and will continue to be volatile due to several factors, such as supply-chain constraints, rising interest rates, a high inflationary environment and geopolitical events. As a result, these uncertainties could put pressure on prices and supply and potentially affect the demand for Prestige Consumer’s products. In the first half of fiscal 2024, the gross margin was slightly down due to cost inflation, as anticipated.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for PBH’s fiscal 2024 earnings per share has remained constant at $4.31.
The Zacks Consensus Estimate for the company’s fiscal 2024 revenues is pegged at $1.14 billion. This suggests an increase of 0.7% from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.2%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have increased 10.3% compared with the industry’s 2.3% rise in the past year.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.7%. Shares of the company have decreased 25% against the industry’s 2.3% rise over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.8%. Shares of DXCM have increased 10.2% compared to the industry’s 3.6% rise over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Reasons to Buy Prestige Consumer (PBH) Stock for Now
Prestige Consumer Healthcare (PBH - Free Report) is likely to grow in the coming quarters, backed by its diverse portfolio of consumer brands, which serves as a strong testament to delivering record revenues and consistent EBITDA margins. The company emphasizes brand-building and product innovation in niche consumer healthcare categories to better improve the lives of its consumers. Moreover, early investments in the ecommerce channel bode well for the company.
However, a high inflationary environment and competitive pressures may pose constraints for Prestige Consumer’s operations.
In the past year, this Zacks Rank #2 (Buy) stock has declined 2.9% against a 2.3% rise of the industry and the 24.7% growth of the S&P 500 composite.
The renowned consumer healthcare product company has a market capitalization of $3.06 billion. Prestige Consumer has an earnings yield of 6.98% compared with the industry’s -1.65%. PBH’s earnings surpassed estimates in three of the trailing four quarters and broke even in one, delivering an average surprise of 2.7%.
Let’s delve deeper.
Upsides
Strength of a Diversified Portfolio: Prestige Consumer owns and markets a diverse portfolio of well-recognized consumer brands, a few of which date back more than 100 years. The majority of the company’s core brands, including Monistat, Summer's Eve, Nix, TheraTears and Dramamine, together accounted for approximately 81.9% of the total revenues in fiscal 2023.
Image Source: Zacks Investment Research
The company has leveraged these wide arrays of diversified brands across many categories, which delivered record revenues and consistent EBITDA margins. Over the years, the company has expanded its brand portfolio both organically and through acquisitions. Having a strong and diverse portfolio of products has provided Prestige Consumer with multiple sources of growth and minimized the impact of any individual category slowdowns.
Focus on Brand-Building: Prestige Consumer’s long-term brand-building efforts, combined with efficient marketing, channel development and innovation that drive long-term brand and category growth, have led the company’s brands to continually hold the leading market share position.
The company acquired the brand Goody’s more than 10 years ago, successfully leveraged insights from consumers and expanded with targeted offerings like Goody's Hangover to meet ever-evolving product needs and preferences. Another iconic franchise, Dramamine, has been successfully using numerous brand-building tactics to grow with consumers.
Recently, the company began addressing the distinctive nausea market with new Dramamine nausea offerings, where it now remains a leader in the category. The Nix brand has also gradually expanded its product assortment with consumers over time, supported by effective marketing to capitalize on category incident levels.
E-Commerce Strength: In the first half of the fiscal year 2024, the company experienced strong 6% consumption growth across the ecommerce channel, simultaneously maintaining a consistent profit profile across all its distribution channels. These impressive wins with consumers across e-commerce, through investments in online content and digital advertising, have positioned PBH for further growth.
Downsides
Debt Profile: At the end of the fiscal second quarter, Prestige Consumer had a long-term debt of $1.26 billion against the corresponding cash and cash equivalents (net of current debt) of $60.1 million. The debt to capital ratio stood moderately leveraged at 45.1%, while times interest earned remained sequentially unchanged at negative 0.3. This suggests that the company might face difficulty in paying off its interest obligations.
Cost Woes: Economic conditions in both the United States and globally have been and will continue to be volatile due to several factors, such as supply-chain constraints, rising interest rates, a high inflationary environment and geopolitical events. As a result, these uncertainties could put pressure on prices and supply and potentially affect the demand for Prestige Consumer’s products. In the first half of fiscal 2024, the gross margin was slightly down due to cost inflation, as anticipated.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for PBH’s fiscal 2024 earnings per share has remained constant at $4.31.
The Zacks Consensus Estimate for the company’s fiscal 2024 revenues is pegged at $1.14 billion. This suggests an increase of 0.7% from the year-ago reported number.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Insulet (PODD - Free Report) and DexCom (DXCM - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.2%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have increased 10.3% compared with the industry’s 2.3% rise in the past year.
HAE carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.7%. Shares of the company have decreased 25% against the industry’s 2.3% rise over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.8%. Shares of DXCM have increased 10.2% compared to the industry’s 3.6% rise over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.