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Bear of the Day: Edgewell Personal Care (EPC)

Madeleine Johnson
·2 mins read

Edgewell Personal Care Co. (EPC) manufactures and markets personal care products. Its brand portfolio consists of Schick, Skintimate, Wilkinson Sword men’s and women’s shaving products and disposable razors; Banana Boat and Hawaiian Tropic sun care products, Diaper Genie; Playtex, Stayfree, and Carefree feminine care products; and Wet Ones wipes.

Q3 Earnings Disappoint

Both Edgewell’s top and bottom line lagged the Zacks Consensus Estimate for the third quarter.

Total revenue of $484 million fell 20.6% year-over-year, and earnings of $0.66 per share plunged 40% compared to the prior year period. Organic sales tumbled 15%.

Net cash was $118.6 million for the first nine months of fiscal 2020 compared to 98.2 million in the prior-year period.

The company’s disappointing Q3 performance can be largely attributed to the coronavirus pandemic and overall decreased demand for its products as stay-at-home orders were enacted and people were forced to remain at home.

Bottom Line

EPC is now a Zacks Rank #5 (Strong Sell).

Five analysts cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 25 cents to $2.72 per share; earnings are expected to decline about 22% for fiscal 2020.

Shares have only gained 19% since the March lows, lagging the S&P 500’s 47+% rebound during the same time frame.

EPC will likely have a long, hard road ahead of it, since the Covid-19 crisis will continue to be a growth obstacle for a while now. But Edgewell is making strides in its long-term growth plan. CEO Rod Little said in the earnings press release that the company is “leaning in on investments to accelerate our participation in faster growing categories” and will be acquiring CREMO, an up-and-coming men’s grooming brand.

Investors who are interested in adding a consumer products peer to their portfolio could consider Sharpie and Rubbermaid manufacturer Newell Brands (NWL). NWL is a #2 (Buy) on the Zacks Rank, and shares have jumped roughly 56% since mid-March.

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