Energizer Holdings, Inc. ENR has successfully completed the buyout of Spectrum Brands’ SPB Global Auto Care (“GAC”) business. As part of the deal, Energizer paid $937.8 million in cash and 5.3 million shares of common stock to Spectrum Brands.
The GAC business mainly includes appearance, performance and A/C recharge product categories. Spectrum Brands believes that Energizer’s skills and resources would further expand this business, and hence it aptly fits in Energizer’s existing auto care business portfolio.
Earlier this month, Energizer acquired Spectrum Brands’ Global Battery and Lighting Business for $2 billion in cash. The company is likely to gain on the addition of well-known battery brands like Rayovac and Varta to its portfolio. In particular, the Varta brand will enhance the company’s footprint in Latin America. Additionally, the takeover is likely to expand Energizer’s battery manufacturing footprint, which is expected to help the company ramp up supply.
Some other notable buyouts in the auto care space include HandStands and Reed-Union Corporation. These brands along with the company’s existing Lexol and Eagle One products are likely to aid Energizer in building its auto care business, both organically and through acquisitions.
Coming back to Energizer, this Zacks Rank #3 (Hold) stock has declined 20.7% in the past three months, against the industry’s growth of 2.4%. This can be mainly attributed to dismal margins in the fourth quarter of fiscal 2018, owing to unfavourable foreign currency translation. Going ahead, Energizer anticipates gross margin to contract 30-70 basis points (bps) due to the above-mentioned factors. Also, commodity costs are expected to hurt the company’s margins by 80 bps in fiscal 2019. Further, the company is reeling under high debt levels that may hurt profitability in the near future.
3 Consumer Staples Stock to Look For
Ollie’s Bargain Outlet Holdings OLLI has long-term earnings growth rate of 24.8% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
WD-40 Company WDFC has long-term earnings growth rate of 10% and a Zacks Rank #2.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Energizer Holdings, Inc. (ENR) : Free Stock Analysis Report
WD-40 Company (WDFC) : Free Stock Analysis Report
Spectrum Brands Holdings Inc. (SPB) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research