EnerSys (ENS) Declares Pricing of Senior Notes Offering
EnerSys ENS announced that it priced a public offering of senior notes worth $300 million in aggregate principal amount. The offering is anticipated to close on Jan 11, subject to certain customary closing conditions.
The company’s shares inched up 0.1% yesterday to eventually close the trading session at $95.49.
Inside the Headlines
The senior notes carry an interest rate of 6.625% and are scheduled to mature in 2032. The senior notes offered at 100% of the principal amount are EnerSys’ unsecured obligations. They will be guaranteed by each of its subsidiaries that act as guarantors to the company’s existing 4.375% senior notes due to expire in 2027 and senior secured credit facilities.
The company stated that the transaction proceeds will be used to pay down a part of its outstanding term loans. The remaining net proceeds from the offering will be utilized to meet general corporate purposes that include repayment of some outstanding borrowings under its revolving credit facility.
Debt Profile
Exiting second-quarter fiscal 2024 (ended Oct 1, 2023), ENS had a long-term debt (net of unamortized debt issuance costs) of $949.9 million. Although the current notes offering will help pay down a share of its term loan, we believe it will also add to EnerSys’ existing debt balance. An unwarranted rise in debt levels can inflate its financial obligations and hurt profitability.
Zacks Rank, Price Performance and Estimates
ENS, with approximately $3.9 billion in market capitalization, currently carries a Zacks Rank #3 (Hold).
The company’s Motive Power segment’s sales are driven by improvements in pricing and a favorable sales mix. The segment’s revenues increased 5.1% year over year in the fiscal second quarter. However, the decrease in capital spending by telecommunication and broadband customers is adversely affecting ENS' Energy Systems segment.
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In the past year, shares of the company have risen 26.4% compared with the industry’s growth of 16.5%.
The Zacks Consensus Estimate for EnerSys’ earnings is pegged at $8.23 per share for fiscal 2024 (ending March 2024), indicating an increase of 6.1% in the past 60 days.
Stocks to Consider
We have highlighted three better-ranked stocks from the same space, namely Emerson Electric Co. EMR, ESCO Technologies ESE and Eaton Corporation ETN. While Emerson and ESCO Technologies sport a Zacks #1 Rank (Strong Buy) each, Eaton carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Emerson delivered a trailing four-quarter average earnings surprise of 4.7%. In the past 60 days, the consensus estimate for EMR’s 2023 earnings has improved 6.2%. Although the stock has fallen 2.9% in the past year, it has risen 7.8% in the past six months.
ESCO Technologies had an earnings surprise of 4.2% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for its fiscal 2024 (ending September 2024) earnings has increased 13.7%. Shares of ESE have risen 22.5% in the past year.
Eaton delivered a trailing four-quarter average earnings surprise of 4.2%. In the past 60 days, the Zacks Consensus Estimate for ETN’s 2023 earnings has increased 1%. The stock has risen 45.5% in the past year.
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Enersys (ENS) : Free Stock Analysis Report
