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Spectrum Brands' Strategic Initiatives and Efficiency Propel Growth
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Spectrum Brands Holdings, Inc. (SPB - Free Report) has captured the attention of analysts and investors, thanks to its strong recent performance and strategic initiatives. The upward momentum in SPB stock can be credited to gains from pricing actions, cost efficiencies, volume-driven return across all three segments and a favorable product mix, all of which have contributed to improved margins.
The company's ongoing Global Productivity Improvement Plan (GPIP) plan focuses on enhancing operational efficiency and reinvesting savings into growth initiatives like innovation, brand advertising and research and development (R&D). These initiatives have not only supported recent stock performance but are also seen as key to delivering long-term sustainable growth.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 7.7% in the past three months compared to the industry’s growth of 18.8%.
Image Source: Zacks Investment Research
Driving Forces Behind SPB’s Stock Performance
Spectrum Brands' GPIP strategy is designed to enhance the company's operating efficiency and effectiveness while prioritizing consumer insights and growth-enabling functions such as technology, marketing and R&D.
A significant portion of the savings from this strategy is expected to be reinvested into growth initiatives, consumer insights, R&D and marketing across all business segments. This plan aims to drive value creation and ensure sustainable long-term growth for the company.
To drive top-line growth, Spectrum Brands increased its investments in brand advertising and innovation by approximately $23 million year over year and is on track to invest an additional $50 million in fiscal 2024. These investments are aimed at strengthening its market presence and supporting long-term growth initiatives.
A significant development on the horizon for Spectrum Brands is the planned separation of its Home & Personal Care division. Analysts believe that this strategic move could enhance shareholder value by enabling each entity to focus on its core strengths and implement more targeted growth strategies. This separation is expected to provide greater operational focus and unlock additional growth opportunities for both businesses.
What’s More for SPB Stock?
Spectrum Brands has been benefiting from increased pricing, cost improvements and a favorable product mix, all of which helped drive margins in the third quarter of fiscal 2024. The company’s proactive cost-cutting measures, initiated in the second half of fiscal 2022, included permanent reductions in salaried headcount and cuts to advertising and promotional spending, resulting in a more disciplined cost structure.
Gross margin expanded by 310 basis points due to lower inventory costs and other cost-saving actions. Adjusted EBITDA from continuing operations increased by 7.9% year over year, driven by improved gross margins and higher sales. Moving forward, Spectrum Brands still projects reported sales to remain relatively flat year over year in fiscal 2024. It expects sales growth in the second half of fiscal 2024. Adjusted EBITDA, excluding the investment income, is likely to grow nearly 20% for the current fiscal year.
E-commerce momentum is on fire for Spectrum Brands, soaring with 20% year-over-year growth in third-quarter fiscal 2024. Digital sales now make up over 21% of total revenues, with every business segment posting double-digit gains. Leading the charge, the Home & Personal Care segment saw a stunning 33% surge, fueled by savvy digital marketing and a record-breaking Amazon Prime Day performance. With small kitchen appliances and global aquatics showing strong recovery, management is optimistic that e-commerce will continue its upward trajectory.
Three Other Stocks to Consider
Some other top-ranked stocks from the Consumer Discretionary sector are iPower Inc. (IPW - Free Report) , Funko, Inc. (FNKO - Free Report) and Crocs, Inc. (CROX - Free Report) .
iPower, an online retailer and supplier of consumer home, pet, garden, outdoor and consumer electronics products, sports a Zacks Rank #1 at present. IPW has a trailing four-quarter earnings surprise of 99.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for iPower’s current financial-year sales indicates growth of 7.2% from the year-ago corresponding figure. The consensus EPS (earnings per share) estimate of 13 cents indicates a substantial increase from a loss of 1 cent in the prior-year quarter.
Funko, a pop culture consumer products company, currently sports a Zacks Rank #1. FNKO has a trailing four-quarter earnings surprise of 87.6%, on average.
The Zacks Consensus Estimate for Funko’s current financial-year sales indicates a decline of 1.7% from the year-ago reported figures.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings implies an improvement of 4.0% and 6.9%, respectively, from the prior-year actuals.
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Spectrum Brands' Strategic Initiatives and Efficiency Propel Growth
Spectrum Brands Holdings, Inc. (SPB - Free Report) has captured the attention of analysts and investors, thanks to its strong recent performance and strategic initiatives. The upward momentum in SPB stock can be credited to gains from pricing actions, cost efficiencies, volume-driven return across all three segments and a favorable product mix, all of which have contributed to improved margins.
The company's ongoing Global Productivity Improvement Plan (GPIP) plan focuses on enhancing operational efficiency and reinvesting savings into growth initiatives like innovation, brand advertising and research and development (R&D). These initiatives have not only supported recent stock performance but are also seen as key to delivering long-term sustainable growth.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 7.7% in the past three months compared to the industry’s growth of 18.8%.
Image Source: Zacks Investment Research
Driving Forces Behind SPB’s Stock Performance
Spectrum Brands' GPIP strategy is designed to enhance the company's operating efficiency and effectiveness while prioritizing consumer insights and growth-enabling functions such as technology, marketing and R&D.
A significant portion of the savings from this strategy is expected to be reinvested into growth initiatives, consumer insights, R&D and marketing across all business segments. This plan aims to drive value creation and ensure sustainable long-term growth for the company.
To drive top-line growth, Spectrum Brands increased its investments in brand advertising and innovation by approximately $23 million year over year and is on track to invest an additional $50 million in fiscal 2024. These investments are aimed at strengthening its market presence and supporting long-term growth initiatives.
A significant development on the horizon for Spectrum Brands is the planned separation of its Home & Personal Care division. Analysts believe that this strategic move could enhance shareholder value by enabling each entity to focus on its core strengths and implement more targeted growth strategies. This separation is expected to provide greater operational focus and unlock additional growth opportunities for both businesses.
What’s More for SPB Stock?
Spectrum Brands has been benefiting from increased pricing, cost improvements and a favorable product mix, all of which helped drive margins in the third quarter of fiscal 2024. The company’s proactive cost-cutting measures, initiated in the second half of fiscal 2022, included permanent reductions in salaried headcount and cuts to advertising and promotional spending, resulting in a more disciplined cost structure.
Gross margin expanded by 310 basis points due to lower inventory costs and other cost-saving actions. Adjusted EBITDA from continuing operations increased by 7.9% year over year, driven by improved gross margins and higher sales. Moving forward, Spectrum Brands still projects reported sales to remain relatively flat year over year in fiscal 2024. It expects sales growth in the second half of fiscal 2024. Adjusted EBITDA, excluding the investment income, is likely to grow nearly 20% for the current fiscal year.
E-commerce momentum is on fire for Spectrum Brands, soaring with 20% year-over-year growth in third-quarter fiscal 2024. Digital sales now make up over 21% of total revenues, with every business segment posting double-digit gains. Leading the charge, the Home & Personal Care segment saw a stunning 33% surge, fueled by savvy digital marketing and a record-breaking Amazon Prime Day performance. With small kitchen appliances and global aquatics showing strong recovery, management is optimistic that e-commerce will continue its upward trajectory.
Three Other Stocks to Consider
Some other top-ranked stocks from the Consumer Discretionary sector are iPower Inc. (IPW - Free Report) , Funko, Inc. (FNKO - Free Report) and Crocs, Inc. (CROX - Free Report) .
iPower, an online retailer and supplier of consumer home, pet, garden, outdoor and consumer electronics products, sports a Zacks Rank #1 at present. IPW has a trailing four-quarter earnings surprise of 99.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for iPower’s current financial-year sales indicates growth of 7.2% from the year-ago corresponding figure. The consensus EPS (earnings per share) estimate of 13 cents indicates a substantial increase from a loss of 1 cent in the prior-year quarter.
Funko, a pop culture consumer products company, currently sports a Zacks Rank #1. FNKO has a trailing four-quarter earnings surprise of 87.6%, on average.
The Zacks Consensus Estimate for Funko’s current financial-year sales indicates a decline of 1.7% from the year-ago reported figures.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and earnings implies an improvement of 4.0% and 6.9%, respectively, from the prior-year actuals.