Energizer (ENR) Rides on Project Momentum, Risks Persist
Energizer Holdings Inc. ENR has been benefiting from its solid global presence across the retail end market. The company’s efforts to drive productivity through improvement initiatives and optimization of its manufacturing footprint have also been proving beneficial. Management continues to work on several initiatives to mitigate the impacts of input cost inflation and drive long-term growth.
The company implemented several initiatives to recover operating margins, cash flow and organizational efficiency under the Project Momentum program. With the program, the company generated savings of $32 million in the first three quarters of fiscal 2023. ENR has added a third year to the program, which is likely to generate $130-$150 million in run-rate savings by fiscal 2025-end.
Energizer anticipates organic revenues to be roughly flat in the fourth quarter of fiscal 2023, with a solid gross margin expansion. It expects a gross margin of about 40%, suggesting a year-over-year increase of 200 basis points for the quarter. The improvement is likely to be driven by input cost tailwinds and incremental Project Momentum savings. For the quarter, adjusted earnings per share are envisioned in the band of $1.10-$1.20 per share compared with 82 cents earned in the prior fiscal year quarter.
ENR remains focused on rewarding shareholders through dividend payouts. For the first quarters of fiscal 2023, it returned $64.8 million to shareholders through dividends, of which $22 million was paid in the fiscal third quarter.
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This Zacks Rank #3 (Hold) company’s shares have gained 13.6% in the past year against the industry’s decline of 24.3%.
However, the company has been witnessing weakness in its battery and auto care businesses and declining sales to device manufacturers. In the fiscal third quarter, revenues from the Batteries & Lights segment fell 3.8% on a year-over-year basis to $511.3 million. For fiscal 2023, it anticipates its organic revenues to decline in low single-digits.
In addition, ENR’s extensive presence across international markets exposes its business to the negative impact of currency headwinds. For instance, foreign exchange headwinds adversely impacted its net sales by $48 million in the first three quarters of fiscal 2023.
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Inter Parfums manufactures, markets and distributes a range of fragrances and fragrance-related products. The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and earnings indicates 19.7% and 14.9% growth from their respective year-ago reported figures. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Post Holdings is a consumer-packaged goods holding company. POST has a trailing four-quarter earnings surprise of 59.6%, on average. The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of 13.2% and 189.3%, respectively, from the year-ago reported numbers.
Grocery Outlet is a retailer of consumables and fresh products. GO has a trailing four-quarter earnings surprise of 14.3%, on average. The Zacks Consensus Estimate for GO’s current financial-year sales and EPS indicates improvements of 11.2% and 4.9%, respectively, from the year-ago reported numbers.
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