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Enersys (ENS) Benefits From Acquisitions Amid Headwinds
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On Jul 8, we issued an updated research report on Enersys (ENS - Free Report) .
In the past three months, this Zacks Rank #3 (Hold) stock has returned 11.6% compared with the industry’s growth of 22.6%.
Existing Business Scenario
Enersys is poised to benefit from a strong backlog in its transportation business and the growing popularity of the ODYSSEY brand along with solid demand for NexSys TPPL products and cloud computing services. The company’s existing strong product portfolio and new product offerings are likely to be beneficial in the quarters ahead. Also, its actions related to the adjustment of its cost structure in response to the coronavirus crisis will likely help it maintain a healthy margin performance amid the crisis.
Also, the company’s buyout of Alpha Technologies (in December 2018) strengthened its product portfolio across several markets, including telecom, broadband, industrial and renewable. Moreover, the NorthStar acquisition (closed in October 2019) has been enhancing its production capacities for TPPL products. Together, the buyouts had a positive impact of 3% on the company’s net sales in the fourth quarter of fiscal 2020 (ended March 2020).
However, its highly leveraged balance sheet remains a major concern. Notably, in the last five fiscal years (2016-2020), the company’s long-term debt (net of unamortized debt issuance costs) rose 17.5% (CAGR). Also, its long-term debt (net of unamortized debt issuance costs) of $1,104.7 million at the end of the fourth quarter of fiscal 2020 represented an increase of 13.7% from the fiscal 2019 end. We find the company more leveraged than the industry. The stock’s long-term debt-to-capital ratio is 45.9%, higher than the industry’s 30.7%.
Moreover, Enersys has been dealing with escalating costs and expenses over time. For instance, in the last five fiscal years (2016-2020), the company’s cost of goods sold recorded a growth of 4.3% (CAGR). Further, over the same time frame, its operating expenses increased 8.1% (CAGR). Notably, if unchecked, higher costs and operating expenses will continue to impact the company’s margins and profitability.
II-VI delivered a positive earnings surprise of 52.08%, on average, in the trailing four quarters.
AZZ delivered a positive earnings surprise of 6.17%, on average, in the trailing four quarters.
Energous delivered a positive earnings surprise of 5.69%, on average, in the trailing four quarters.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
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Enersys (ENS) Benefits From Acquisitions Amid Headwinds
On Jul 8, we issued an updated research report on Enersys (ENS - Free Report) .
In the past three months, this Zacks Rank #3 (Hold) stock has returned 11.6% compared with the industry’s growth of 22.6%.
Existing Business Scenario
Enersys is poised to benefit from a strong backlog in its transportation business and the growing popularity of the ODYSSEY brand along with solid demand for NexSys TPPL products and cloud computing services. The company’s existing strong product portfolio and new product offerings are likely to be beneficial in the quarters ahead. Also, its actions related to the adjustment of its cost structure in response to the coronavirus crisis will likely help it maintain a healthy margin performance amid the crisis.
Also, the company’s buyout of Alpha Technologies (in December 2018) strengthened its product portfolio across several markets, including telecom, broadband, industrial and renewable. Moreover, the NorthStar acquisition (closed in October 2019) has been enhancing its production capacities for TPPL products. Together, the buyouts had a positive impact of 3% on the company’s net sales in the fourth quarter of fiscal 2020 (ended March 2020).
However, its highly leveraged balance sheet remains a major concern. Notably, in the last five fiscal years (2016-2020), the company’s long-term debt (net of unamortized debt issuance costs) rose 17.5% (CAGR). Also, its long-term debt (net of unamortized debt issuance costs) of $1,104.7 million at the end of the fourth quarter of fiscal 2020 represented an increase of 13.7% from the fiscal 2019 end. We find the company more leveraged than the industry. The stock’s long-term debt-to-capital ratio is 45.9%, higher than the industry’s 30.7%.
Moreover, Enersys has been dealing with escalating costs and expenses over time. For instance, in the last five fiscal years (2016-2020), the company’s cost of goods sold recorded a growth of 4.3% (CAGR). Further, over the same time frame, its operating expenses increased 8.1% (CAGR). Notably, if unchecked, higher costs and operating expenses will continue to impact the company’s margins and profitability.
Stocks to Consider
Some better-ranked stocks from the same space are II-VI Incorporated , AZZ Inc. (AZZ - Free Report) and Energous Corporation (WATT - Free Report) . While II-VI sports a Zacks Rank #1 (Strong Buy), AZZ and Energous carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
II-VI delivered a positive earnings surprise of 52.08%, on average, in the trailing four quarters.
AZZ delivered a positive earnings surprise of 6.17%, on average, in the trailing four quarters.
Energous delivered a positive earnings surprise of 5.69%, on average, in the trailing four quarters.
5 Stocks to Soar Past the Pandemic: In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.
See the 5 high-tech stocks now>>