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Energizer Holdings (ENR) Up 5.5% Since Earnings Report: Can It Continue?

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It has been more than a month since the last earnings report for Energizer Holdings, Inc. (ENR - Free Report) . Shares have added about 5.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Energizer Holdings Q3 Earnings Beat, Revenues Miss

Energizer Holdingsreported mixed third-quarter fiscal 2017 results wherein adjusted earnings of $0.43 cents per share comfortably beat the Zacks Consensus Estimate of $0.37 and grew 34.4% year over year. However, revenues of $372 million missed the consensus mark of $391.5 million but grew 3% year over year. The year-over-year growth was driven by sales from auto care acquisition.

However, organic revenues decreased 2.6% year over year.

Quarterly Details

Batteries revenues fell 3.7% year over year to $325.8 million while revenues from Other segment more than doubled to $46.2 million.

In Americas, the company recorded revenues of $228.6 million, up 6.9% from last year’s quarter. Revenues from Europe, the Middle East and Africa region were $76.6 million, down 0.8%, and the Asia Pacific region recorded revenue decrease of 4.4% year over year to $66.8 million.

Gross margin decreased 10 basis points (bps), to 42.5%. Selling, general and administrative expenses as a percentage of net sales were 22.4% compared with 24.1% reported in the year-ago quarter.

As of Jun 30, 2017, Energizer had cash and cash equivalents of $404.4 million compared with $287.3 million as of Sep 30, 2016.  Long-term debt was $979.2 million compared with $981.7 million as of Sep 30, 2016.

For the nine months ended Jun 30, 2017, cash flow from operations came in at $145.6 million and free cash flow amounted to $155.3 million.

As of Jun 30, 2017, the company had repurchased shares worth $8.6 million. However, no shares were repurchased during the quarter.

Dividend payments in the quarter were approximately $17 million and approximately $52 million on a year-to-date basis.

Guidance

For fiscal 2017, Energizer now expects adjusted earnings per share in a band of $2.85–$2.90, up from $2.75–$2.85 projected earlier, which includes an anticipated 5.2% incremental contribution from the recently acquired auto care business.

Organic revenues are expected to be up in low-single digits. Free cash flow is expected to exceed $190 million and gross margin is expected to increase 125–150 bps up from earlier projection of 100–125 bps. Capex is expected in a range of $30–$35 million.

Stiff competition from regional players remains a major concern for Energizer. Moreover, forex volatility will continue to be a headwind for the company, reducing net sales by 1.5–2%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Energizer Holdings' stock has a poor Growth Score of F, however its Momentum is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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