Why Is Analog Devices (ADI) Down 2.4% Since Last Earnings Report?
EnerSys ENS recently announced preliminary numbers for fourth quarter of fiscal 2018, ahead of the final results (scheduled on May 31).
For the fourth quarter of fiscal 2018, the company expects adjusted earnings of $1.24 per share compared with $1.20-$1.24, projected earlier. Net sales came in at $683 million, an increase of 9% from the year-ago figure. This upside can be attributed to higher pricing of products and increase in organic volume.
For fiscal 2018, EnerSys anticipates adjusted earnings of $4.65 per share. Net sales came in at $2,581.8 million, up 9% from fiscal 2017. The year-over-year improvement in net sales was owing to higher pricing of products, increase in organic volume foreign as well as favorable impact of foreign currency translation.
Per EnerSys, its long-term growth drivers — higher demand for premium products, lean initiatives, robust prospects in Asia, cost reduction programs and strategic product launches — remain intact. These are likely to boost top-line performance moving ahead.
In the past six months, this Zacks Rank #3 (Hold) company has returned 10.5%, outperforming the industry’s gain of 3.5%.
Enersys Price, Consensus and EPS Surprise
Enersys Price, Consensus and EPS Surprise | Enersys Quote
Moreover, EnerSys’ segments namely — Motive Power and Reserve Power — are witnessing good prospects of late. For Motive Power business, the company believes that China will provide the much-needed growth impetus as market therein thrives on the back of rise in middle-class population. Also, strong sales of thin plate pure lead, IRONCLAD, gel, high-frequency chargers and battery management systems in key-end markets are driving this segment. For Reserve Power Business, the company believes Indian market will act as the strongest catalyst.
However, continuous increase in the price of lead and other raw materials, including steel, plastic and copper might inflate the cost of goods sold, thus eroding the company’s profitability. Also, EnerSys has been making multiple long-term investments to boost growth, which may adversely impact the company’s gross margins.
Stocks to Consider
Some better-ranked stocks from the same space include Regal Beloit Corporation RBC, Franklin Electric Co., Inc. FELE and A. O. Smith Corporation AOS. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Regal Beloit surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 1.6%.
Franklin Electric outpaced estimates thrice in the trailing four quarters, with an average positive earnings surprise of 5.3%.
A. O. Smith exceeded estimates thrice in the preceding four quarters, with an average earnings surprise of 3.1%.
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