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EnerSys' (ENS) Q2 Earnings Top Estimates, '18 EPS View Up

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EnerSys ENS reported mixed results for second-quarter fiscal 2019 (ended September 2018).

Earnings/Revenues

Quarterly adjusted earnings came in at $1.17 per share, up 11.4% year over year. The reported tally was within the guided range of $1.14-$1.18 per share stated by the company in Aug 8. Notably, the bottom-line figure also surpassed the Zacks Consensus Estimate by a penny.

Net sales in the third quarter improved 7% year over year to $660.5 million. However, the top-line figure marginally missed the Zacks Consensus Estimate of $662 million. The company stated that organic volume growth and improved pricing boosted quarterly revenues, but the upside was partially offset by unfavourable foreign-exchange impact. 

Segmental Break-Up

The revenues of Americas segment improved 13.8% year over year to $388.6 million.  The Europe, the Middle East and Africa (EMEA) segment generated $204 million sales in the fiscal second quarter, up 3.1% from the year-ago tally. However, the top-line numbers of Asia dipped 12.8% year over year to $67.9 million.

Enersys Price, Consensus and EPS Surprise

 

Enersys Price, Consensus and EPS Surprise | Enersys Quote

Costs/Margins

Gross profit margin in the reported quarter was 24.4%, down 160 basis points (bps) year over year. Aggregate operating expenses flared up 2.6% year over year to $96.5 million. Operating margin in the quarter shrunk 80 bps year over year to 9.6%.

Balance Sheet/Cash Flow

Exiting the Sep-end quarter, EnerSys had cash and cash equivalents of $545.2 million, up from $522.1 million recorded as of Mar 31, 2018. Long-term debt stood at $599.7 million, up from $579.5 million reported at the end of fiscal 2018.

In first-half fiscal 2019, the company generated $84 million cash from operating activities, up 84.9% year over year. Capital expenditure was up 33.3% to $35.5 million.

Outlook

EnerSys intends to drive its top-line growth trajectory on the back stronger end-market sales. This Zacks Rank #1 (Strong Buy) company intends to boost its near-term profitability on the back of higher revenues, improved pricing, restructuring moves and benefits secured from the enterprise resource planning system.

However, EnerSys noted that material cost inflation (on account of tariffs) and higher priced lead costs will continue to dent its margins. Adjusted earnings view for fiscal 2019 (ending March 2019) is currently pegged at $1.23-$1.27 per share, higher than the prior guidance of $1.14-$1.18 per share.

Other Stocks to Consider

Some other top-ranked stocks in the Zacks Industrial Products sector are listed below:

Atkore International Group Inc. (ATKR - Free Report) sports a Zacks Rank #1 (Strong Buy), at present. The company generated an average positive earnings surprise of 24.46% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Donaldson Company, Inc. DCI carries a Zacks Rank #2 (Buy), currently. The company delivered an average positive earnings surprise of 2.29% in the preceding four quarters.

Currently, Rockwell Automation, Inc. ROK also holds a Zacks Rank of 2. The company came up with an average positive earnings surprise of 5.58% during the same time frame.

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