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Reasons to Add EnerSys (ENS) Stock to Your Portfolio Now
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EnerSys (ENS - Free Report) is well poised for growth courtesy of strength across its end markets, strategic acquisitions and focus on improving the product line and operational excellence.
The company has a market capitalization of $3.9 billion. Over the past year, it has gained 20.2% compared with the industry’s growth of 21.6%. ENS currently sports a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Let’s delve into the factors that have been aiding the firm for a while now.
Business Strength: EnerSys has been experiencing strength across its Motive Power segment of late. The segment’s sales are driven by improvements in pricing and a favorable sales mix. For instance, the segment’s revenues increased 5.1% year over year in the second quarter of fiscal 2024 (ended Oct 1, 2023).
The company has been benefiting from its solid product offerings, a firm focus on product innovation and strengthening demand for its products. The global megatrends, including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization, are likely to drive its performance in the quarters ahead.
Acquisition Benefits: ENS remains focused on acquiring businesses to gain access to new customers and product lines. In April 2023, It acquired the U.K.-based battery service and maintenance provider Industrial Battery and Charger Services Limited (“IBCS”). The buyout boosted the company’s motive power service offerings and strengthened its presence in the U.K. market. It also augmented ENS’ comprehensive range of battery-related services, including installation and maintenance.
Balanced Capital Allocation Strategy: EnerSys utilizes its cash flow to improve organic growth capabilities, execute acquisitions, pay out dividends and repurchase shares. In the first six months of fiscal 2024, the company paid out dividends of $16.3 million and bought back shares worth $47.3 million. The quarterly dividend rate rose by 29% to 22.5 cents per share in August 2023. Also, exiting the fiscal second quarter, it was left to repurchase shares worth $147 million in aggregate.
Business Update: In December 2023, ENS updated its 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. For third-quarter fiscal 2024, it expects adjusted diluted earnings per share between $2.50 and $2.60, higher than $1.80-$1.90 guided previously.
AZZ delivered a trailing four-quarter average earnings surprise of 37.5%. In the past 60 days, the consensus estimate for AZZ’s 2023 earnings has improved 2.2%. The stock has risen 44.5% in the past year.
A. O. Smith has a trailing four-quarter average earnings surprise of 14%. The consensus estimate for the company’s 2023 earnings has moved 0.5% north in the past 60 days. AOS shares have gained 34.9% in the past year.
Eaton delivered a trailing four-quarter average earnings surprise of 4.2%. In the past 60 days, the Zacks Consensus Estimate for ETN’s 2023 earnings has increased by a penny. The stock has rallied 53.9% in the past year.
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Reasons to Add EnerSys (ENS) Stock to Your Portfolio Now
EnerSys (ENS - Free Report) is well poised for growth courtesy of strength across its end markets, strategic acquisitions and focus on improving the product line and operational excellence.
The company has a market capitalization of $3.9 billion. Over the past year, it has gained 20.2% compared with the industry’s growth of 21.6%. ENS currently sports a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Let’s delve into the factors that have been aiding the firm for a while now.
Business Strength: EnerSys has been experiencing strength across its Motive Power segment of late. The segment’s sales are driven by improvements in pricing and a favorable sales mix. For instance, the segment’s revenues increased 5.1% year over year in the second quarter of fiscal 2024 (ended Oct 1, 2023).
The company has been benefiting from its solid product offerings, a firm focus on product innovation and strengthening demand for its products. The global megatrends, including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization, are likely to drive its performance in the quarters ahead.
Acquisition Benefits: ENS remains focused on acquiring businesses to gain access to new customers and product lines. In April 2023, It acquired the U.K.-based battery service and maintenance provider Industrial Battery and Charger Services Limited (“IBCS”). The buyout boosted the company’s motive power service offerings and strengthened its presence in the U.K. market. It also augmented ENS’ comprehensive range of battery-related services, including installation and maintenance.
Balanced Capital Allocation Strategy: EnerSys utilizes its cash flow to improve organic growth capabilities, execute acquisitions, pay out dividends and repurchase shares. In the first six months of fiscal 2024, the company paid out dividends of $16.3 million and bought back shares worth $47.3 million. The quarterly dividend rate rose by 29% to 22.5 cents per share in August 2023. Also, exiting the fiscal second quarter, it was left to repurchase shares worth $147 million in aggregate.
Business Update: In December 2023, ENS updated its 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. For third-quarter fiscal 2024, it expects adjusted diluted earnings per share between $2.50 and $2.60, higher than $1.80-$1.90 guided previously.
3 Other Promising Stocks
We have highlighted three other top-ranked stocks from the same space, namely AZZ Inc. (AZZ - Free Report) , A. O. Smith Corporation (AOS - Free Report) and Eaton Corporation (ETN - Free Report) . While AZZ sports a Zacks #1 Rank, A. O. Smith and Eaton each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AZZ delivered a trailing four-quarter average earnings surprise of 37.5%. In the past 60 days, the consensus estimate for AZZ’s 2023 earnings has improved 2.2%. The stock has risen 44.5% in the past year.
A. O. Smith has a trailing four-quarter average earnings surprise of 14%. The consensus estimate for the company’s 2023 earnings has moved 0.5% north in the past 60 days. AOS shares have gained 34.9% in the past year.
Eaton delivered a trailing four-quarter average earnings surprise of 4.2%. In the past 60 days, the Zacks Consensus Estimate for ETN’s 2023 earnings has increased by a penny. The stock has rallied 53.9% in the past year.