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Energizer (ENR) Up 8.5% in 3 Months: How to Play Ahead?
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Energizer Holdings Inc. (ENR - Free Report) has seen a remarkable uptrend in its stock performance over the past three months, driven by the strategic initiatives for sustainable growth, emphasizing consumer engagement and pricing strategies. In the said period, ENR's stock has risen approximately 8.5%, outpacing both the industry’s 4.9% increase and the sector's growth of 3%. In the most recent trading session, Energizer's stock closed at $29.84, which is trading above its 50-day and 100-day moving averages, signaling strong upward momentum.
From a valuation perspective, we note that the stock presents an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 8.87, below the five-year median of 11.01 and the industry’s average of 17.27, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Strategic Initiatives and Debt Reduction
The company’s strategic focus on cost-effective measures has translated into substantial financial benefits. Project Momentum, a key component of Energizer’s cost-management strategy, has yielded nearly $100 million in cost savings by the second quarter of 2024. This initiative, alongside favorable commodity pricing and reduced ocean freight costs, has driven a 260-basis-point expansion in the adjusted gross margin, reaching 40.5%.
Debt reduction remains a cornerstone of Energizer’s financial strategy. Over the second quarter, the company paid down more than $60 million in debt, with a projected leverage decrease to below 5X by fiscal 2024. 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 is robust, with a weighted average cost of debt at 4.6% and no significant maturities until 2027. This strategic debt reduction not only strengthens the balance sheet but also enhances the company’s attractiveness to investors seeking stable, financially sound opportunities.
Market Expansion and Innovation
Energizer is actively expanding its growth strategy through innovation and strategic market expansions. The company is enhancing its e-commerce and digital infrastructure to better capture growth online across various markets, a strategic move in response to the increasing shift toward online shopping.
Leveraging advanced data analytics for improved pricing and revenue management, Energizer is expanding brand visibility and exploring strategic opportunities in attractive international markets. These initiatives aim to bolster current performance and position the company advantageously for future market dynamics.
For the third quarter of 2024, Energizer projects a 1% year-over-year growth in organic net sales and a 150-basis-point improvement in the gross margin. Adjusted earnings per share are expected to increase by 20% at the mid-point of the guidance range. These bullish projections reflect the company’s confident outlook based on ongoing strategic initiatives and past successes.
Project Momentum remains central to Energizer’s cost-management strategy, contributing significantly to operational efficiency and profitability. By the second quarter of 2024, this initiative had achieved $11 million in savings and a 600-basis-point year-over-year expansion in segmental profit within the Auto Care segment. Energizer anticipates total savings from Project Momentum to be between $160 million and $180 million over three years, with expected savings of $55-$65 million for fiscal 2024.
Wrapping up
Energizer’s robust financial health and strategic initiatives, including significant debt reduction and Project Momentum, position it well for sustained growth. The company's proactive approach to market expansion, digital enhancement, and innovation solidifies its appeal to investors seeking stability and strategic growth in their portfolios. Rightly, Energizer currently sports a Zacks Rank #2 (Buy).
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%.
BRF Brasil Foods SA, formerly Perdigao S.A., is a Brazil-based food company. It presently has a Zacks Rank of 1. BRFS has a trailing four-quarter average earnings surprise of 82.2%.
The Zacks Consensus Estimate for BRF's current financial-year earnings and sales indicates growth of 210% and 7.5%, respectively, from the year-ago reported figures. Treehouse Foods is a manufacturer of packaged foods and beverages. It currently sports a Zacks Rank #2.
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year earnings and sales indicates declines of 8.5% and 1.6%, respectively, from the year-ago reported figures. THS has a negative trailing four-quarter average earnings surprise of 4.5%.
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Energizer (ENR) Up 8.5% in 3 Months: How to Play Ahead?
Energizer Holdings Inc. (ENR - Free Report) has seen a remarkable uptrend in its stock performance over the past three months, driven by the strategic initiatives for sustainable growth, emphasizing consumer engagement and pricing strategies. In the said period, ENR's stock has risen approximately 8.5%, outpacing both the industry’s 4.9% increase and the sector's growth of 3%. In the most recent trading session, Energizer's stock closed at $29.84, which is trading above its 50-day and 100-day moving averages, signaling strong upward momentum.
From a valuation perspective, we note that the stock presents an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 8.87, below the five-year median of 11.01 and the industry’s average of 17.27, the stock offers compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of A, further validating its appeal.
Image Source: Zacks Investment Research
Strategic Initiatives and Debt Reduction
The company’s strategic focus on cost-effective measures has translated into substantial financial benefits. Project Momentum, a key component of Energizer’s cost-management strategy, has yielded nearly $100 million in cost savings by the second quarter of 2024. This initiative, alongside favorable commodity pricing and reduced ocean freight costs, has driven a 260-basis-point expansion in the adjusted gross margin, reaching 40.5%.
Debt reduction remains a cornerstone of Energizer’s financial strategy. Over the second quarter, the company paid down more than $60 million in debt, with a projected leverage decrease to below 5X by fiscal 2024. 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 is robust, with a weighted average cost of debt at 4.6% and no significant maturities until 2027. This strategic debt reduction not only strengthens the balance sheet but also enhances the company’s attractiveness to investors seeking stable, financially sound opportunities.
Market Expansion and Innovation
Energizer is actively expanding its growth strategy through innovation and strategic market expansions. The company is enhancing its e-commerce and digital infrastructure to better capture growth online across various markets, a strategic move in response to the increasing shift toward online shopping.
Leveraging advanced data analytics for improved pricing and revenue management, Energizer is expanding brand visibility and exploring strategic opportunities in attractive international markets. These initiatives aim to bolster current performance and position the company advantageously for future market dynamics.
For the third quarter of 2024, Energizer projects a 1% year-over-year growth in organic net sales and a 150-basis-point improvement in the gross margin. Adjusted earnings per share are expected to increase by 20% at the mid-point of the guidance range. These bullish projections reflect the company’s confident outlook based on ongoing strategic initiatives and past successes.
Project Momentum remains central to Energizer’s cost-management strategy, contributing significantly to operational efficiency and profitability. By the second quarter of 2024, this initiative had achieved $11 million in savings and a 600-basis-point year-over-year expansion in segmental profit within the Auto Care segment. Energizer anticipates total savings from Project Momentum to be between $160 million and $180 million over three years, with expected savings of $55-$65 million for fiscal 2024.
Wrapping up
Energizer’s robust financial health and strategic initiatives, including significant debt reduction and Project Momentum, position it well for sustained growth. The company's proactive approach to market expansion, digital enhancement, and innovation solidifies its appeal to investors seeking stability and strategic growth in their portfolios. Rightly, Energizer currently sports a Zacks Rank #2 (Buy).
Key Picks
Some other top-ranked stocks are Freshpet Inc. (FRPT - Free Report) , BRF Brasil Foods SA. (BRFS - Free Report) and Treehouse Foods, Inc. (THS - 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%.
BRF Brasil Foods SA, formerly Perdigao S.A., is a Brazil-based food company. It presently has a Zacks Rank of 1. BRFS has a trailing four-quarter average earnings surprise of 82.2%.
The Zacks Consensus Estimate for BRF's current financial-year earnings and sales indicates growth of 210% and 7.5%, respectively, from the year-ago reported figures.
Treehouse Foods is a manufacturer of packaged foods and beverages. It currently sports a Zacks Rank #2.
The Zacks Consensus Estimate for Treehouse Foods’ current financial-year earnings and sales indicates declines of 8.5% and 1.6%, respectively, from the year-ago reported figures. THS has a negative trailing four-quarter average earnings surprise of 4.5%.