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EnerSys (ENS) Banks on Solid Order Level Amid Forex Woes
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EnerSys (ENS - Free Report) is poised to gain from strength in its Specialty segment, driven by increased orders in transportation, aerospace and defense markets in both the United States and Europe. The segment’s revenues increased 6.8% year over year in the third quarter of fiscal 2024 (ended December 2023). Management expects the Motive power segment to benefit from strength in automation and electrification markets.
In the quarters ahead, EnerSys is poised to benefit from its solid product offerings, a firm focus on product innovation (including lithium, Touch-Safe, CPUC and DC fast charge) and strengthening demand. Technological expertise and effective pricing are other tailwinds. The company strengthened its position as a leading provider of NexSys Thin Plate Pure Lead products in the past few years. The global megatrends, including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization, are aiding the company.
EnerSys has been strengthening its business through acquisitions. EnerSys acquired the United Kingdom based, battery service and maintenance provider, Industrial Battery and Charger Services Limited (IBCS) in April 2023. The addition of IBCS has strengthened its presence in the U.K. market. It also augmented ENS’ comprehensive range of battery-related services, including installation and maintenance, to repair and replacement.
The company’s commitment to rewarding its shareholders through dividends and share buybacks is encouraging. It paid out dividends of $25.4 million in the first nine months of fiscal 2024 and $28.5 million in fiscal 2023 (ended March 2023). It also bought back shares worth $82.3 million in the first nine months of fiscal 2024 and $22.9 million in fiscal 2023. EnerSys hiked its quarterly dividend by 29% to 22.5 cents per share in August 2023.
However, a decrease in capital spending of the telecommunication and broadband customers is adversely impacting EnerSys’ Energy Systems segment. The segment’s revenues were down 14% year over year in the third quarter of fiscal 2024. Demand softness in the network communications, and telecom and broadband end markets remains concerning for the company.
The company, which operates across diverse geographies, is exposed to uncertainty in the global macroeconomic environment, especially related to politics, labor market and economic instability. Also, unfavorable movement in foreign currencies may hurt its performance.
ATMU’s earnings estimates have increased 2.9% for 2024 in the past 60 days. Shares of Atmus Filtration have risen 11.5% in the past year.
Tetra Tech, Inc. (TTEK - Free Report) currently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 14.4%.
In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has increased 2.9%. The stock has soared 35.6% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.7% in the past 60 days. The stock has gained 30.3% in the past year.
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EnerSys (ENS) Banks on Solid Order Level Amid Forex Woes
EnerSys (ENS - Free Report) is poised to gain from strength in its Specialty segment, driven by increased orders in transportation, aerospace and defense markets in both the United States and Europe. The segment’s revenues increased 6.8% year over year in the third quarter of fiscal 2024 (ended December 2023). Management expects the Motive power segment to benefit from strength in automation and electrification markets.
In the quarters ahead, EnerSys is poised to benefit from its solid product offerings, a firm focus on product innovation (including lithium, Touch-Safe, CPUC and DC fast charge) and strengthening demand. Technological expertise and effective pricing are other tailwinds. The company strengthened its position as a leading provider of NexSys Thin Plate Pure Lead products in the past few years. The global megatrends, including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization, are aiding the company.
EnerSys has been strengthening its business through acquisitions. EnerSys acquired the United Kingdom based, battery service and maintenance provider, Industrial Battery and Charger Services Limited (IBCS) in April 2023. The addition of IBCS has strengthened its presence in the U.K. market. It also augmented ENS’ comprehensive range of battery-related services, including installation and maintenance, to repair and replacement.
The company’s commitment to rewarding its shareholders through dividends and share buybacks is encouraging. It paid out dividends of $25.4 million in the first nine months of fiscal 2024 and $28.5 million in fiscal 2023 (ended March 2023). It also bought back shares worth $82.3 million in the first nine months of fiscal 2024 and $22.9 million in fiscal 2023. EnerSys hiked its quarterly dividend by 29% to 22.5 cents per share in August 2023.
However, a decrease in capital spending of the telecommunication and broadband customers is adversely impacting EnerSys’ Energy Systems segment. The segment’s revenues were down 14% year over year in the third quarter of fiscal 2024. Demand softness in the network communications, and telecom and broadband end markets remains concerning for the company.
The company, which operates across diverse geographies, is exposed to uncertainty in the global macroeconomic environment, especially related to politics, labor market and economic instability. Also, unfavorable movement in foreign currencies may hurt its performance.
Enersys Price and Consensus
Enersys price-consensus-chart | Enersys Quote
Zacks Rank & Stocks to Consider
EnerSys currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Atmus Filtration Technologies Inc. (ATMU - Free Report) presently carries a Zacks Rank #2 (Buy) and a trailing four-quarter earnings surprise of 20.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATMU’s earnings estimates have increased 2.9% for 2024 in the past 60 days. Shares of Atmus Filtration have risen 11.5% in the past year.
Tetra Tech, Inc. (TTEK - Free Report) currently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 14.4%.
In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has increased 2.9%. The stock has soared 35.6% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.7% in the past 60 days. The stock has gained 30.3% in the past year.