On Wednesday, Canaccord Genuity maintained its Hold rating on shares of Energizer Holdings (NYSE:ENR) but increased the price target to $36 from $32 following the company's fourth-quarter earnings report. Energizer's quarterly results showed sales figures that aligned with both Canaccord Genuity's estimates and the consensus.
The company delivered better-than-expected profitability, with adjusted EBITDA marginally surpassing estimates by about 1% and adjusted earnings per share (EPS) approximately 4% higher than consensus.
The analyst noted that margin expansion for Energizer was primarily driven by savings from Project Momentum and favorable commodity input costs. However, these were partially offset by the company's strategic pricing and promotional investments.
Looking ahead, the fiscal year 2025 guidance for Energizer is anticipated to benefit from broader distribution and product innovation initiatives, including the launch of the Armor All Podium Series in the Auto Care segment.
Despite these positive developments, the analyst expressed concerns about the growth prospects for Energizer. The company is facing challenges in achieving significant growth in its business, as evidenced by the need for increased promotional efforts to stimulate only modest value growth in the battery segment.
The Auto Care division, although supported by a structural tailwind from an increasing and aging car fleet, could face volume challenges due to the depressed state of new and used car sales, which are impacted by the overall cost of ownership.
Canaccord Genuity has revised its profitability forecasts for Energizer upwards for 2025 and 2026, while revenue projections remain relatively stable. The firm acknowledges that Energizer has effectively managed its earnings but emphasizes that stronger top-line growth will be necessary for the company to continue seeing material margin expansion. The revised price target reflects the firm's updated estimates and ongoing caution regarding Energizer's growth trajectory.
In other recent news, Energizer Holdings Inc. reported a strong fourth quarter with adjusted earnings per share of $1.22 and revenue of $805.7 million, surpassing analysts' expectations. For the full fiscal year 2024, Energizer reported an adjusted EPS of $3.32, a 7% increase from the previous fiscal year, despite a 2.5% decline in revenue to $2.89 billion.
The company's future projections for fiscal year 2025 include an organic revenue increase of 1% to 2%, and an adjusted EPS range of $3.45 to $3.65.
JPMorgan (NYSE:JPM) upgraded Energizer stock from Underweight to Neutral, while Evercore ISI and Truist Securities reaffirmed their positive ratings. These upgrades and affirmations were based on Energizer's improved sales prospects and expected steady performance in both revenue and earnings.
Energizer expects to see growth in battery sales consistent with household formation, setting a conservative target for fiscal year 2025 of 1% to 2% growth. The company also plans to capitalize on the growing e-commerce sector, which already accounts for 20% of the U.S. market.
Furthermore, Energizer managed to reduce its net leverage to 4.9 times in fiscal 2024, aided by a $200 million debt pay down and adjusted EBITDA growth. These are some of the recent developments in Energizer Holdings Inc.
InvestingPro Insights
Energizer Holdings' recent performance and future outlook can be further illuminated by data from InvestingPro. The company's market capitalization stands at $2.67 billion, reflecting its significant presence in the consumer goods sector. Notably, Energizer's P/E ratio (adjusted) for the last twelve months as of Q4 2024 is 11.63, suggesting a relatively modest valuation compared to its earnings.
InvestingPro Tips highlight that Energizer has been profitable over the last twelve months, aligning with the company's better-than-expected profitability mentioned in the article. Additionally, the stock has shown a strong return over the last three months, with InvestingPro data indicating a 29.25% price total return over this period. This recent stock performance may reflect investor optimism about the company's margin expansion and strategic initiatives.
However, it's worth noting that revenue growth has been slightly negative, with a -2.46% decline in the last twelve months as of Q4 2024. This data point supports the analyst's concerns about Energizer's growth challenges mentioned in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Energizer Holdings, providing a deeper understanding of the company's financial health and market position.
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