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Here's Why You Should Retain Prestige Consumer (PBH) Stock Now
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Prestige Consumer Healthcare (PBH - Free Report) is well-poised to grow in the coming quarters, backed by its diverse portfolio of well-established brands coupled with strong marketing strategies. The company’s impressive brand-building initiatives and innovative product developments have consistently positioned its brands as market leaders. In addition, its strength in e-commerce channels is encouraging.
However, uncertain macroeconomic challenges and excessive reliance on limited customers may pose constraints for Prestige Consumer’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has increased 9.3% against a 5.7% fall of the industry and the 22.3% growth of the S&P 500 composite.
The renowned consumer healthcare product company has a market capitalization of $3.38 billion. PBH’s earnings surpassed estimates in three of the trailing four quarters and came in line in one instance, delivering an average surprise of 2.4%.
Let’s delve deeper.
Upsides
Strength of a Diversified Portfolio: Known for its diverse portfolio of well-established consumer brands, Prestige Consumer has a history of robust marketing strategies that drive sales growth and long-term profitability. Some of the company’s core brands, including Monistat, Summer's Eve, Nix, TheraTears and Dramamine, together generated nearly 81.9% of the total revenues in fiscal 2023.
In the third quarter of fiscal 2024, revenue growth was fueled by the impressive Eye & Ear Care category performance in North America and Hydralyte brand growth in the international segment. Strong Ear & Eye Care and Dermatological category sales were the largest category growth drivers in North America in the nine months of fiscal 2024.
Image Source: Zacks Investment Research
Over the years, PBH has expanded its brand portfolio both organically and through acquisitions, including the purchase of TheraTears and other consumer brands from Akorn Operating Company LLC, which has provided it with multiple growth opportunities while minimizing the impact of category slowdowns. This diversity stretches beyond just brands to the diversity of channels, geographies and suppliers, each of which benefits the company’s business in periods of uncertainty and volatility.
Focus on Brand-Building: Prestige Consumer’s long-term growth strategy is centered around building great brands and product innovation in niche consumer healthcare categories to better improve the lives of its consumers. These long-term brand-building initiatives, combined with efficient marketing, channel development and innovative approaches, have led Prestige’s brands to consistently hold the leading market share position.
For example, the company expanded the Goody's brand, acquired over a decade ago, with tailored products like Goody's Hangover by leveraging consumer insights to meet their evolving preferences. Goody's headache powders have grown more than three times than the overall analgesic category in fiscal 2024. Dramamine, another iconic brand under Prestige Consumer, has implemented various brand-building tactics to expand its consumer base. 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, supported by effective marketing to capitalize on category incident levels.
E-commerce Strength: Prestige Consumer has forged long-term partnerships across its diverse retail footprint and made significant early investments in e-commerce. These efforts have yielded strong results, with solid high-single-digit year-over-year growth in e-commerce and double-digit consumption growth. Simultaneously, the company has been 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 position it well for continued growth.
Downsides
Cost Woes: Prestige Consumer faces challenges from economic uncertainties, including supply-chain constraints, inflation and geopolitical events, which could affect pricing, supply and demand for its products. For instance, gross profit for the International OTC Healthcare segment decreased to 57% during the nine months ended Dec 31, 2023 from 60.8% in the year-ago period, primarily due to increased supply-chain costs and product mix.
Dependence on Few Customers: Prestige Consumer's revenues are concentrated among a few customers with whom it does not have any long-term agreements. During fiscal 2023, Walmart, which accounted for approximately 19.7% of the gross sales, was the only customer that accounted for more than 10% of the company’s gross revenues. PBH faces risks such as inventory reductions by customers or the loss of top clients due to industry consolidation, which may potentially impact its financial stability.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for PBH’s fiscal 2024 earnings per share has remained constant at $4.33.
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.
Inspire Medical Systems’ earnings are expected to increase 51.4% in 2024 compared with the S&P 500’s 17.1%. INSP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 353.6%. Its shares have declined 9% compared with the industry’s 20.9 fall in the past year.
Insulet, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term earnings growth rate of 18.1% compared with the industry’s 11.4%. Shares of the company have decreased 48.7% compared with the industry’s 5.6% fall over the past year.
PODD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 100.1%. In the last reported quarter, it delivered an average earnings surprise of 108.9%.
Exact Sciences, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 23.8% for 2024 compared with the industry’s 13.1%. Shares of EXAS have dropped 3.4% compared with the industry’s 18% decrease over the past year.
EXAS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 51.5%. In the last reported quarter, it delivered an average earnings surprise of 49.1%.
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Here's Why You Should Retain Prestige Consumer (PBH) Stock Now
Prestige Consumer Healthcare (PBH - Free Report) is well-poised to grow in the coming quarters, backed by its diverse portfolio of well-established brands coupled with strong marketing strategies. The company’s impressive brand-building initiatives and innovative product developments have consistently positioned its brands as market leaders. In addition, its strength in e-commerce channels is encouraging.
However, uncertain macroeconomic challenges and excessive reliance on limited customers may pose constraints for Prestige Consumer’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has increased 9.3% against a 5.7% fall of the industry and the 22.3% growth of the S&P 500 composite.
The renowned consumer healthcare product company has a market capitalization of $3.38 billion. PBH’s earnings surpassed estimates in three of the trailing four quarters and came in line in one instance, delivering an average surprise of 2.4%.
Let’s delve deeper.
Upsides
Strength of a Diversified Portfolio: Known for its diverse portfolio of well-established consumer brands, Prestige Consumer has a history of robust marketing strategies that drive sales growth and long-term profitability. Some of the company’s core brands, including Monistat, Summer's Eve, Nix, TheraTears and Dramamine, together generated nearly 81.9% of the total revenues in fiscal 2023.
In the third quarter of fiscal 2024, revenue growth was fueled by the impressive Eye & Ear Care category performance in North America and Hydralyte brand growth in the international segment. Strong Ear & Eye Care and Dermatological category sales were the largest category growth drivers in North America in the nine months of fiscal 2024.
Image Source: Zacks Investment Research
Over the years, PBH has expanded its brand portfolio both organically and through acquisitions, including the purchase of TheraTears and other consumer brands from Akorn Operating Company LLC, which has provided it with multiple growth opportunities while minimizing the impact of category slowdowns. This diversity stretches beyond just brands to the diversity of channels, geographies and suppliers, each of which benefits the company’s business in periods of uncertainty and volatility.
Focus on Brand-Building: Prestige Consumer’s long-term growth strategy is centered around building great brands and product innovation in niche consumer healthcare categories to better improve the lives of its consumers. These long-term brand-building initiatives, combined with efficient marketing, channel development and innovative approaches, have led Prestige’s brands to consistently hold the leading market share position.
For example, the company expanded the Goody's brand, acquired over a decade ago, with tailored products like Goody's Hangover by leveraging consumer insights to meet their evolving preferences. Goody's headache powders have grown more than three times than the overall analgesic category in fiscal 2024. Dramamine, another iconic brand under Prestige Consumer, has implemented various brand-building tactics to expand its consumer base. 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, supported by effective marketing to capitalize on category incident levels.
E-commerce Strength: Prestige Consumer has forged long-term partnerships across its diverse retail footprint and made significant early investments in e-commerce. These efforts have yielded strong results, with solid high-single-digit year-over-year growth in e-commerce and double-digit consumption growth. Simultaneously, the company has been 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 position it well for continued growth.
Downsides
Cost Woes: Prestige Consumer faces challenges from economic uncertainties, including supply-chain constraints, inflation and geopolitical events, which could affect pricing, supply and demand for its products. For instance, gross profit for the International OTC Healthcare segment decreased to 57% during the nine months ended Dec 31, 2023 from 60.8% in the year-ago period, primarily due to increased supply-chain costs and product mix.
Dependence on Few Customers: Prestige Consumer's revenues are concentrated among a few customers with whom it does not have any long-term agreements. During fiscal 2023, Walmart, which accounted for approximately 19.7% of the gross sales, was the only customer that accounted for more than 10% of the company’s gross revenues. PBH faces risks such as inventory reductions by customers or the loss of top clients due to industry consolidation, which may potentially impact its financial stability.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for PBH’s fiscal 2024 earnings per share has remained constant at $4.33.
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.
Key Picks
Some better-ranked stocks from the broader medical space are Inspire Medical Systems (INSP - Free Report) , Insulet (PODD - Free Report) and Exact Sciences (EXAS - Free Report) .
Inspire Medical Systems’ earnings are expected to increase 51.4% in 2024 compared with the S&P 500’s 17.1%. INSP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 353.6%. Its shares have declined 9% compared with the industry’s 20.9 fall in the past year.
INSP sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Insulet, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term earnings growth rate of 18.1% compared with the industry’s 11.4%. Shares of the company have decreased 48.7% compared with the industry’s 5.6% fall over the past year.
PODD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 100.1%. In the last reported quarter, it delivered an average earnings surprise of 108.9%.
Exact Sciences, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 23.8% for 2024 compared with the industry’s 13.1%. Shares of EXAS have dropped 3.4% compared with the industry’s 18% decrease over the past year.
EXAS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 51.5%. In the last reported quarter, it delivered an average earnings surprise of 49.1%.