Is Energizer Holdings a Winner in the Household Products Industry?

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Based in St. Louis, Mo. Energizer Holdings, Inc. (ENR) is a global manufacturer, marketer and marketer of household and specialty batteries, portable lamps, and automotive appearance, performance, refrigerants and fragrance products. The Company operates through two geographic segments: Americas and International. ENR shares have fallen 31.7% over the past year and 16.6% over the past six months to close yesterday’s trading session at $32.79. The stock has fallen 18.2% since the start of the year.

Earlier this month, ENR released its fiscal 2022 second-quarter results, with both top and bottom results beating Street’s estimates. Its price execution across brands and strong organic growth in its automotive care business helped drive better-than-expected revenue performance. “Through pricing actions and improved supply chain performance, we continue to offset inflationary cost pressures and accelerate time to market,” said Mark LaVigne, CEO. However, the company’s sales remained flat and its adjusted profit fell year-over-year.

In addition, ENR raised its revenue growth outlook for the year while maintaining its adjusted earnings per share outlook. It now expects mid-single-digit sales growth for the full year and still expects adjusted EPS of $3.00 to $3.30. But the company also noted that global economic and financial conditions, the Russia-Ukraine conflict, and the COVID-19 pandemic could negatively impact NRE. Additionally, “competition in our product categories could impair our ability to execute our business strategy, achieve profitability or maintain relationships with existing customers,” the company said.

Here is what could shape the performance of ENR in the short term:

Mixed profitability

ENR’s gross profit margin of 37.24% is 7.5% above the industry average of 34.63%, while its net profit margin of 6.06% is 14% above the industry average. industry average of 5.32%. However, its negative leveraged FCF margin of 1.05% compares to the industry average of 4.32%.

Its ROA and ROTC of 3.55% and 6.45%, respectively, are 25.2% and 1.1% lower than the industry averages of 4.74% and 6.52%. But its ROE of 42.42% is 212.7% higher than the industry average of 13.57%.

Mixed performance

For its fiscal second quarter, ended March 31, 2022, ENR’s total net sales increased slightly from their value a year ago to $685.40 million, beating the consensus estimate of $30.02 million. of dollars. Its gross profit was $238.40 million, down 11.9% year-on-year. Its adjusted net income was down 36.8% from the prior year quarter to $33.30 million, while adjusted EPS was down 39% year-over-year to 0.47 $, beating Street’s expectations of 24.2%. Additionally, for the six months ended March 31, 2022, ENR’s cash flow from operating activities was $108.70 million, compared to $12.40 million for the same period last year. former. Its cash, cash equivalents and restricted cash balance were $213.20 million, an 18.3% year-over-year increase.

The debt burden

The company has a total debt of $3.72 billion, while its net debt stands at $3.51 billion. But its insufficient cash flow raises concerns about its ability to repay debt. Its trailing 12-month net operating cash flow was negative $58.60 million, and its trailing 12-month leveraged free cash flow was $31.65 million. It has a negative debt to free cash flow ratio of 148.45. Moreover, its 0.82 quick report questions his ability to pay his debts.

Mixed evaluation

In non-GAAP forward P/E terms, ENR is currently trading at 10.43x, 43.4% below the industry average of 18.42x. Additionally, its forward price-to-sales ratio of 0.77 is 35.3% below the industry average of 1.19.

However, ENR’s 12-month price/cash flow is 176% above the industry average of 14.66x, and its forecast price/pound is 56.2% above the industry average. 2.74 x industry.

POWR ratings reflect uncertain outlook

ENR has an overall C rating, which translates to Neutral in our own POWR Rankings system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.

The stock has a C rating for Value, which is consistent with its mixed valuation.

ENR also has a C rating for quality, in line with its mixed profitability.

Among the 63 actions of the Home improvement and goods industry, ENR is ranked #40.

Beyond what I said above, you can also check out ENR Ratings for Sentiment, Growth, Momentum, and Stability. here.

See the top-rated stocks in the home and property improvement industry here.

Conclusion

ENR pays $1.20 in dividends per year, yielding 3.66% on its current share price, attracting interest from income investors. Its dividend payouts have grown at a CAGR of 2.7% over the past five years. However, its insufficient cash flow could make it difficult to return cash to shareholders in the future. Additionally, the street expects its EPS to decline 8.4% year-over-year in the fiscal year ending September 30, 2022. Thus, it might be wise to wait for a improving its finances and cash flow generation before investing in the stock. .

How does Energizer Holdings, Inc. (ENR) compare to its peers?

Although ENR has an overall POWR rating of C, one might consider taking a look at its industry peers, Acuity Brands, Inc. (AYI), which has an A (Strong Buy) rating, and Builders FirstSource, Inc. (BLDR) and Select Interior Concepts, Inc. (SCI) which has a B (buy) rating.

Note that BLDR is one of the few stocks hand-picked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.


ENR shares were unchanged in premarket trading on Tuesday. Year-to-date, ENR is down -17.52%, compared to a -15.50% rise in the benchmark S&P 500 over the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a master’s degree in economics, she gained knowledge in equity research and portfolio management at Finlatics. After…

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