Energizer Holdings Inc. ENR stands out as a compelling value play within the industry, trading at a forward 12-month price-to-earnings ratio of 10.13, below the industry average of 22.07 and the sector average of 17.51. This undervaluation highlights its potential for investors seeking attractive entry points. ENR's Value Score of A further emphasizes its investment appeal.
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Shares of the company are currently trading 7% below its 52-week high of $39.51, reached on Dec. 2, 2024, making investors contemplate their next move. In the past three months, ENR stock has gained 26.5%, outperforming the industry’s 3.7% decline. The company’s strategic initiative and operational efficiencies have supported it to outperform the broader sector’s decline of 5.6% and the S&P 500 index’s growth of 8% in the same period.
ENR Stock Past Three-Month Performance
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Energizer closed Friday’s trading session at $36.75. The stock is trading above its 50 and 200-day simple moving averages of $34.37 and $30.21, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in ENR’s financial health and growth prospects.
ENR Trades Above 50 & 200-Day Moving Averages
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ENR’s Strategic Focus on Growth & Operational Efficiency
Energizer is driving sustainable growth through strategic initiatives focused on enhancing consumer engagement, improving brand loyalty and expanding market share while maintaining margin improvement. A key driver of this success is the company’s Project Momentum initiative, which has generated significant cost savings and operational efficiencies.
In the fourth quarter of fiscal 2024, Project Momentum contributed to a 220-basis-point improvement in adjusted gross margin, supported by approximately $18 million in savings and favorable input costs, such as reduced commodity and material prices. Energizer’s disciplined financial management approach provides a solid foundation for continued growth and investor confidence in its long-term prospects.
Energizer is also expanding its distribution network to ensure sustained global revenue growth. By forming new retail partnerships and increasing shelf space with existing customers, the company is enhancing its market presence both domestically and internationally. Also, Energizer’s e-commerce channel, which saw a 15% sales increase in fiscal 2024, is expected to drive further growth through investments in digital capabilities and enhanced online product assortments, allowing the company to capture a larger share of the U.S. battery market.
Energizer’s Positive FY25 Outlook Signals Strong Growth
Energizer has issued an optimistic outlook for fiscal 2025, demonstrating confidence in its growth prospects. For the fiscal first quarter, organic revenues are expected to grow 2% to 3% year over year, with adjusted gross margins improving 50-100 basis points. Adjusted earnings per share (EPS) is forecasted to range from 60cents to 65 cents, indicating mid-single-digit growth compared with the previous year’s reported number.
For the full fiscal year, the company anticipates organic revenue growth of 1% to 2%, driven by expanded distribution in its Battery and Auto Care businesses. Energizer expects a 50-basis-point improvement in adjusted gross margin, bringing it above 41%, and adjusted EBITDA to be between $625 million and $645 million. Adjusted EPS is expected to range from $3.45 to $3.65.
Estimate Revisions Favor ENR Stock
Analysts have responded positively to Energizer's prospects, which has been indicated in upward revisions in the Zacks Consensus Estimate for EPS. In the past 30 days, analysts have increased their estimates for the current fiscal year by 4 cents. The consensus estimate for earnings is pegged at $3.58 per share.
The consensus estimate for earnings for the next fiscal year has been raised 10 cents to $3.82 per share. The Zacks Consensus Estimate for the current and the next fiscal year’s sales is pegged at $2.93 billion and $2.97 billion, indicating year-over-year growth of 1.3% and 1.5%, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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Rising Labor and SG&A Costs Impacting Energizer
Energizer faces rising SG&A expenses, primarily due to higher labor, benefits and inflation-driven costs. In the fiscal fourth quarter, adjusted SG&A expenses rose 6.5% year over year to $123 million, driven by increased labor, travel, depreciation from digital transformation and higher legal fees. Adjusted SG&A as a percentage of net sales increased to 15.3%, up from 14.2% in the prior year quarter. Management foresees SG&A expenses on a dollar basis to be up between $15 million and $20 million year over year for fiscal 2025. Evidently, mounting cost pressures could strain margins if not offset by revenue growth.
Moreover, the strengthening of the U.S. dollar has introduced unexpected currency headwinds for the first quarter of fiscal 2025, with management estimating a drag of 100-150 basis points on the top line. This is expected to impact earnings per share by approximately 3 cents to 5 cents. While some currency-related challenges were anticipated in fiscal 2025 guidance, the recent acceleration in dollar strength adds incremental pressure to near-term performance.
Conclusion
Energizer’s Project Momentum initiative has generated significant cost savings, strengthened its financial position and supported investor confidence. The company’s positive fiscal outlook and continued momentum in both its domestic and international markets provide a solid foundation for sustained growth. However, looming currency headwinds and rising SG&A expenses for fiscal 2025 remain areas of concern. Given these factors, holding Energizer stock is a reasonable strategy for long-term investors seeking stability and growth. The company currently sports a Zacks Rank #3 (Hold).
Key Picks
Here, we have highlighted three better-ranked stocks, namely Ingredion Incorporated INGR, BRF Brasil Foods SA BRFS and Freshpet Inc. FRPT.
Ingredion is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
INGR delivered a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for INGR’s current financial-year earnings indicates growth of 12.4% from the year-ago number.
BRF Brasil Foods, formerly Perdigao S.A., is a Brazil-based food company. It presently carries a Zacks Rank of 2 (Buy). BRFS delivered a trailing four-quarter average earnings surprise of 51.5%.
The Zacks Consensus Estimate for BRF's current financial-year earnings and sales indicates growth of 260% and 14.7%, respectively, from the year-ago figures.
Freshpet Inc. manufactures and markets natural fresh foods, refrigerated meals and treats for dogs and cats in the United States and Canada. It has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Freshpet’s current financial-year earnings and sales indicates growth of 228.6% and 27.3%, respectively, from the year-ago figures. FRPT delivered a trailing four-quarter average earnings surprise of 144.5%.
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