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Enersys ENS, on Dec. 17, updated its previously provided third-quarter fiscal 2025 outlook, considering the impact of incremental benefits related to the Advanced Manufacturing Production Credit - Section 45X of the Internal Revenue Code. The company expects that the U.S. Treasury Department’s final regulations for certain direct material input costs will result in higher benefits associated with the tax credits.
The company currently anticipates annual tax credits, which are noted as a decrease in the cost of goods sold, to be in the band of $135-$175 million. This reflects an annual increase of about $15 million to its expected tax credits from its previously projected annual range of $120-$160 million.
Considering impacts from the incremental benefits, Enersys currently anticipates generating an adjusted EPS between $3.00 and $3.10 for third-quarter fiscal 2025. This includes an adjustment related to the retroactive impacts of the incremental IRC 45X tax benefits. The figure compares favorably with the previously estimated range of $2.20-$2.30.
For fiscal 2025, EnerSys raised its adjusted earnings guidance to the range of $9.65-$9.95 per share from the earlier projection of $8.75–$9.05. As noted, the company anticipates to receive the benefits of tax credits related to its eligibility under the U.S. production volumes through Dec. 31, 2032.
ENS Stock’s Zacks Rank & Price Performance
ENS, with a $3.8 billion market capitalization, currently carries a Zacks Rank #4 (Sell). A decrease in capital spending of the telecommunication and broadband customers is adversely impacting the Energy Systems segment. The segment’s revenues were down 9.6% year over year in the second quarter of fiscal 2025. Demand softness in the telecom and broadband end markets remains concerning for the company.
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In the past three months, EnerSys stock has lost 7.8% compared with the industry’s 1.7% decline.
The Zacks Consensus Estimate for fiscal 2025 earnings has decreased 0.8% to $8.86 per share in the past 60 days.
Stocks to Consider
Some better-ranked companies are discussed below.
Powell Industries POWL presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 57.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, the Zacks Consensus Estimate for POWL’s fiscal 2025 earnings has increased 10.1% to $13.70 per share.
Zurn Elkay Water Solutions Corporation ZWS presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 8.4%.
In the past 60 days, the consensus estimate for ZWS’ 2024 earnings has increased 2.5%.
RBC Bearings Incorporated RBC presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 2.5%.
In the past 60 days, the consensus estimate for RBC’s fiscal 2025 earnings has increased 0.5% to $9.71 per share.