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Here's Why You Should Hold EnerSys (ENS) in Your Portfolio
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EnerSys (ENS - Free Report) has been witnessing solid momentum in its Specialty segment, supported by strong orders in transportation, aerospace and defense markets in the United States and Europe. The segment’s revenues increased 6.8% year over year in the third quarter of fiscal 2024 (ended December 2023). Strength in automation and electrification markets has been driving the performance of the Motive Power segment. The global megatrends, including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization, are expected to support the company’s growth in the quarters ahead.
EnerSys believes in adding complementary businesses to its portfolio via acquisitions. In April 2023, it acquired UK-based battery service and maintenance provider, Industrial Battery and Charger Services Limited (IBCS). The inclusion of IBCS strengthened its foothold in the U.K. market. It also augmented ENS’ comprehensive range of battery-related services, including installation and maintenance, and repair and replacement.
ENS remains committed to rewarding its shareholders through dividend payouts and share buybacks. For instance, it paid out dividends of $25.4 million and repurchased shares worth $82.3 million in the first nine months of fiscal 2024. Its quarterly dividend rate was hiked by 29% in August 2023.
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Over the past year, this Zacks Rank #3 (Hold) company has gained 12.7% compared with the industry’s growth of 62.7%.
However, EnerSys’ Energy Systems segment has been grappling with a decline in capital spending of the telecommunication and broadband customers. The segment’s revenues decreased 14% year over year in the third quarter of fiscal 2024. Lower demand in the network communications, and telecom and broadband markets remains concerning for the company.
High capital expenditures might also hurt the company’s bottom line in the near-term. The company's capital expenditure totaled $59 million in the first nine months of fiscal 2024. For fiscal 2024 (ended March 2024), it expects capital expenditure in the range of $80-$100 million.
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Some better-ranked companies from the same space are discussed below.
The Zacks Consensus Estimate for POWL’s fiscal 2024 (ending September 2024) earnings has been stable in the past 60 days. Shares of Powell Industries have soared 240.9% in the past year.
Zurn Elkay Water Solutions Corporation (ZWS - Free Report) presently carries a Zacks Rank #2. ZWS delivered a trailing four-quarter average earnings surprise of 12.4%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 3.6%. Shares of the company have risen 57.1% in the past year.
Eaton Corporation plc (ETN - Free Report) presently carries a Zacks Rank #2. ETN delivered a trailing four-quarter average earnings surprise of 4.8%. In the past 60 days, the Zacks Consensus Estimate for Eaton’s 2024 earnings has increased 0.4%. The stock has risen 109.9% in the past year.
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Here's Why You Should Hold EnerSys (ENS) in Your Portfolio
EnerSys (ENS - Free Report) has been witnessing solid momentum in its Specialty segment, supported by strong orders in transportation, aerospace and defense markets in the United States and Europe. The segment’s revenues increased 6.8% year over year in the third quarter of fiscal 2024 (ended December 2023). Strength in automation and electrification markets has been driving the performance of the Motive Power segment. The global megatrends, including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization, are expected to support the company’s growth in the quarters ahead.
EnerSys believes in adding complementary businesses to its portfolio via acquisitions. In April 2023, it acquired UK-based battery service and maintenance provider, Industrial Battery and Charger Services Limited (IBCS). The inclusion of IBCS strengthened its foothold in the U.K. market. It also augmented ENS’ comprehensive range of battery-related services, including installation and maintenance, and repair and replacement.
ENS remains committed to rewarding its shareholders through dividend payouts and share buybacks. For instance, it paid out dividends of $25.4 million and repurchased shares worth $82.3 million in the first nine months of fiscal 2024. Its quarterly dividend rate was hiked by 29% in August 2023.
Image Source: Zacks Investment Research
Over the past year, this Zacks Rank #3 (Hold) company has gained 12.7% compared with the industry’s growth of 62.7%.
However, EnerSys’ Energy Systems segment has been grappling with a decline in capital spending of the telecommunication and broadband customers. The segment’s revenues decreased 14% year over year in the third quarter of fiscal 2024. Lower demand in the network communications, and telecom and broadband markets remains concerning for the company.
High capital expenditures might also hurt the company’s bottom line in the near-term. The company's capital expenditure totaled $59 million in the first nine months of fiscal 2024. For fiscal 2024 (ended March 2024), it expects capital expenditure in the range of $80-$100 million.
3 Promising Stocks
Some better-ranked companies from the same space are discussed below.
Powell Industries, Inc. (POWL - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 77.6%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for POWL’s fiscal 2024 (ending September 2024) earnings has been stable in the past 60 days. Shares of Powell Industries have soared 240.9% in the past year.
Zurn Elkay Water Solutions Corporation (ZWS - Free Report) presently carries a Zacks Rank #2. ZWS delivered a trailing four-quarter average earnings surprise of 12.4%. In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 3.6%. Shares of the company have risen 57.1% in the past year.
Eaton Corporation plc (ETN - Free Report) presently carries a Zacks Rank #2. ETN delivered a trailing four-quarter average earnings surprise of 4.8%. In the past 60 days, the Zacks Consensus Estimate for Eaton’s 2024 earnings has increased 0.4%. The stock has risen 109.9% in the past year.