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Energizer's (ENR) Auto Care Unit Aids Amid Battery Unit Hurdles
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Energizer Holdings Inc. (ENR - Free Report) is actively implementing strategic initiatives aimed at promoting sustainable growth and profitability. These initiatives span across various domains, including consumer engagement and pricing strategies, all designed to enhance brand loyalty and increase market share without compromising margins.
A pivotal element of these strategies is the Project Momentum initiative, which concentrates on cost-saving measures and operational efficiencies to support margin expansion and long-term value creation. To date, Project Momentum has surpassed its objectives, generating approximately $100 million in total savings, with $20 million achieved in the second quarter of fiscal 2024 alone.
These savings have been instrumental in facilitating margin expansion and earnings growth. Energizer anticipates total savings from this program between $160 million and $180 million over three years, with expected savings of $55-$65 million for fiscal 2024.
Image Source: Zacks Investment Research
The Auto Care segment has emerged as a significant growth driver for Energizer, with revenues increasing 2.3% year over year to $182.3 million in the second quarter of fiscal 2024. This segment experienced an impressive 600-basis-point expansion in segmental profit, driven by innovative product offerings, effective marketing strategies and strategic distribution channels.
In the second quarter of fiscal 2024, Energizer demonstrated notable improvement in its financial metrics. The adjusted gross margin expanded 260 basis points, reaching 40.5%. This increase was primarily driven by Project Momentum, which contributed $11 million to savings, along with lower input costs due to favorable commodities pricing and reduced ocean freight costs.
Robust Debt Reduction Strategy
Energizer has implemented a robust debt reduction strategy, reflecting its commitment to strengthening its financial position and enhancing shareholder value. In the fiscal second quarter alone, the company paid down $60 million in debt.
Over the past seven quarters, Energizer has reduced its debt by $425 million and decreased its leverage by nearly one turn. The company’s debt structure remains strong, with a weighted average cost of debt at 4.6% and no significant debt maturities until 2027.
Challenges in the Batteries & Lights Segment
Despite these positive developments, Energizer's Batteries & Lights segment faced challenges, with revenues decreasing 4.9% year over year to $481 million in the fiscal second quarter. This segment also encountered competitive pressures from private labels, highlighting ongoing challenges despite broader efforts to stabilize and regain market strength.
Zacks Rank & Estimates
This Zacks Rank #3 (Hold) company’s shares have lost 1.6% in the past three months against the industry’s growth of 1.8%.
The Zacks Consensus Estimate of current and next quarters’ sales is pegged at $705.1 million and $817.9 million, respectively, suggesting year-over-year growth of 0.8% each. Also, the Zacks Consensus Estimate for current and next-quarter earnings is pegged at 66 cents and $1.25 per share, respectively, indicating year-over-year increases of 22.2% and 4.2%.
Wrapping up
Energizer Holdings is strategically navigating toward sustainable growth through a comprehensive approach that emphasizes operational efficiency, cost savings and debt reduction. While the company faces challenges in certain segments, its proactive initiatives and strong financial management position it well for success.
The Zacks Consensus Estimate for Freshpet’s current fiscal-year earnings and sales indicates declines of 177.1% and 24.8%, respectively, from the year-ago reported figures. FRPT has a trailing four-quarter average earnings surprise of 118.2%.
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Vital Farms's current financial-year earnings and sales indicates declines of 59.3% and 22.5%, respectively, from the year-ago reported figures. VITL has a trailing four-quarter average earnings surprise of 102.1%.
Ingredion serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. It currently has a Zacks Rank of 2 (Buy). INGR has a trailing four-quarter average earnings surprise of 10.1%.
The Zacks Consensus Estimate for Ingredion’s current fiscal-year earnings indicates growth of 3.6% from the prior-year actuals.
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Energizer's (ENR) Auto Care Unit Aids Amid Battery Unit Hurdles
Energizer Holdings Inc. (ENR - Free Report) is actively implementing strategic initiatives aimed at promoting sustainable growth and profitability. These initiatives span across various domains, including consumer engagement and pricing strategies, all designed to enhance brand loyalty and increase market share without compromising margins.
A pivotal element of these strategies is the Project Momentum initiative, which concentrates on cost-saving measures and operational efficiencies to support margin expansion and long-term value creation. To date, Project Momentum has surpassed its objectives, generating approximately $100 million in total savings, with $20 million achieved in the second quarter of fiscal 2024 alone.
These savings have been instrumental in facilitating margin expansion and earnings growth. Energizer anticipates total savings from this program between $160 million and $180 million over three years, with expected savings of $55-$65 million for fiscal 2024.
Image Source: Zacks Investment Research
The Auto Care segment has emerged as a significant growth driver for Energizer, with revenues increasing 2.3% year over year to $182.3 million in the second quarter of fiscal 2024. This segment experienced an impressive 600-basis-point expansion in segmental profit, driven by innovative product offerings, effective marketing strategies and strategic distribution channels.
In the second quarter of fiscal 2024, Energizer demonstrated notable improvement in its financial metrics. The adjusted gross margin expanded 260 basis points, reaching 40.5%. This increase was primarily driven by Project Momentum, which contributed $11 million to savings, along with lower input costs due to favorable commodities pricing and reduced ocean freight costs.
Robust Debt Reduction Strategy
Energizer has implemented a robust debt reduction strategy, reflecting its commitment to strengthening its financial position and enhancing shareholder value. In the fiscal second quarter alone, the company paid down $60 million in debt.
Over the past seven quarters, Energizer has reduced its debt by $425 million and decreased its leverage by nearly one turn. The company’s debt structure remains strong, with a weighted average cost of debt at 4.6% and no significant debt maturities until 2027.
Challenges in the Batteries & Lights Segment
Despite these positive developments, Energizer's Batteries & Lights segment faced challenges, with revenues decreasing 4.9% year over year to $481 million in the fiscal second quarter. This segment also encountered competitive pressures from private labels, highlighting ongoing challenges despite broader efforts to stabilize and regain market strength.
Zacks Rank & Estimates
This Zacks Rank #3 (Hold) company’s shares have lost 1.6% in the past three months against the industry’s growth of 1.8%.
The Zacks Consensus Estimate of current and next quarters’ sales is pegged at $705.1 million and $817.9 million, respectively, suggesting year-over-year growth of 0.8% each. Also, the Zacks Consensus Estimate for current and next-quarter earnings is pegged at 66 cents and $1.25 per share, respectively, indicating year-over-year increases of 22.2% and 4.2%.
Wrapping up
Energizer Holdings is strategically navigating toward sustainable growth through a comprehensive approach that emphasizes operational efficiency, cost savings and debt reduction. While the company faces challenges in certain segments, its proactive initiatives and strong financial management position it well for success.
Key Picks
Some better-ranked stocks are Freshpet Inc. (FRPT - Free Report) , Vital Farms Inc. (VITL - Free Report) and Ingredion Incorporated (INGR - Free Report) .
Freshpet is a pet food company. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current fiscal-year earnings and sales indicates declines of 177.1% and 24.8%, respectively, from the year-ago reported figures. FRPT has a trailing four-quarter average earnings surprise of 118.2%.
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Vital Farms's current financial-year earnings and sales indicates declines of 59.3% and 22.5%, respectively, from the year-ago reported figures. VITL has a trailing four-quarter average earnings surprise of 102.1%.
Ingredion serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries. It currently has a Zacks Rank of 2 (Buy). INGR has a trailing four-quarter average earnings surprise of 10.1%.
The Zacks Consensus Estimate for Ingredion’s current fiscal-year earnings indicates growth of 3.6% from the prior-year actuals.