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Industrial battery manufacturer, EnerSys (ENS - Free Report) kept its winning streak alive for the fifth consecutive quarter. The company’s fiscal fourth-quarter 2017 adjusted earnings came in at $1.28 a share, beating the Zacks Consensus Estimate of $1.21 by 5.8%.
The bottom line fared even better on a year-over-year comparison, improving 24.3% from the prior-year figure of $1.03. The number also steered past the projected range of $1.19–$1.23.
For fiscal 2017, the company’s adjusted earnings per share of $4.75 were up 20.9% year over year.
EnerSys’ diligent restructuring initiatives have produced tangible improvements in short-term productivity, which drove bottom-line growth. In addition, decent top-line performance proved conducive to earnings growth.
Inside the Headlines
During the quarter, net sales were up 3% to $626.8 million year over year. The figure also trumped the Zacks Consensus Estimate of $619 million. The year-over-year increase was influenced by robust organic volume and higher pricing of products. In addition, revenues from acquisitions also supplemented growth.
For full-year 2017, the company’s total sales were $2,367.1 million, up 2.2% from fiscal 2016. While higher sales in Asia (up 7.5%) and America (up 4.4%) drove the top line, this was largely offset by poor sales in the EMEA region (down 3.1%).
In terms of geography, both the Asian and EMEA regions recorded a year-over-year decline. While the Asian region net sales dipped 16.9%, EMEA net sales were down by 2.5%, both on a year-over-year basis. However, the Americas witnessed a modest year-over-year sales improvement of 10.2%, offsetting some of this decline. While currency translation woes and organic sales decline marred total sales in both the EMEA region and Asia, positive contributions from acquisition and organic growth drove the same for the Americas.
EnerSys’ operating earnings for the quarter totaled $51.9 million. Gross margin expanded 40 basis points to 26.6%. Improvements in gross margins came on the back of improved favorable product mix and benefits from restructuring programs.
At the end of the fiscal fourth quarter, EnerSys had cash and cash equivalents of $500.3 million, up from $467.1 million at the end of fiscal third-quarter 2017. The company’s long-term debt was $587.6 million, inching down from $600.6 million at the end of the fiscal third quarter.
During the quarter, net cash from operating activities came in at $246.0 million compared with $307.6 million recorded in the prior-year quarter.
Guidance
Concurrent with the earnings release, EnerSys slashed its fiscal first-quarter 2018 guidance, wherein it expects adjusted earnings per share to lie in the range of $1.10–$1.14, from the earlier guided range of $1.21–$1.25. This guidance excludes projected charges of 4 cents from restructuring programs and 1 cent from acquisition related expenses.
The recent price increases administered by the company are taking longer than expected to take hold, which, in turn, is attributable to the drab guidance. Also, EnerSys anticipates higher commodity cost pressure during the fiscal first quarter to weigh down on the financials.
Our Take
EnerSys ended fiscal fourth-quarter 2017 on a decent note, with both top- and bottom-line beats and impressive year-over-year growth. Going forward, the company believes its long-term growth drivers are intact, which will continue to drive growth for the fiscal 2018. These factors include robust motive power, aerospace and defense businesses. Also, telecommunications business is expected to act as a catalyst, driven by the rise of data usage.
However, the drab guidance for fiscal 2018 is unlikely to go down well with the investors. We believe that high seasonality in the demand of the company’s products, currency fluctuations and fall of commodity prices pose as major concerns that can thwart growth substantially. Also, softness in EnerSys’ motive power business is expected to put pressure on fiscal 2018 top-line performance.
Stocks to Consider
EnerSys currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are listed below:
ACCO Brands Corporation (ACCO - Free Report) has a positive average earnings surprise of 79.7% for the last four quarters and currently holds a Zacks Rank #2.
Avery Dennison Corporation (AVY - Free Report) holds a Zacks Rank #2 and generated an average earnings surprise of 5.5% in the past quarters.
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Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
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EnerSys (ENS) Q4 Earnings & Revenues Beat, Guidance Slashed
Industrial battery manufacturer, EnerSys (ENS - Free Report) kept its winning streak alive for the fifth consecutive quarter. The company’s fiscal fourth-quarter 2017 adjusted earnings came in at $1.28 a share, beating the Zacks Consensus Estimate of $1.21 by 5.8%.
The bottom line fared even better on a year-over-year comparison, improving 24.3% from the prior-year figure of $1.03. The number also steered past the projected range of $1.19–$1.23.
For fiscal 2017, the company’s adjusted earnings per share of $4.75 were up 20.9% year over year.
EnerSys’ diligent restructuring initiatives have produced tangible improvements in short-term productivity, which drove bottom-line growth. In addition, decent top-line performance proved conducive to earnings growth.
Inside the Headlines
During the quarter, net sales were up 3% to $626.8 million year over year. The figure also trumped the Zacks Consensus Estimate of $619 million. The year-over-year increase was influenced by robust organic volume and higher pricing of products. In addition, revenues from acquisitions also supplemented growth.
For full-year 2017, the company’s total sales were $2,367.1 million, up 2.2% from fiscal 2016. While higher sales in Asia (up 7.5%) and America (up 4.4%) drove the top line, this was largely offset by poor sales in the EMEA region (down 3.1%).
In terms of geography, both the Asian and EMEA regions recorded a year-over-year decline. While the Asian region net sales dipped 16.9%, EMEA net sales were down by 2.5%, both on a year-over-year basis. However, the Americas witnessed a modest year-over-year sales improvement of 10.2%, offsetting some of this decline. While currency translation woes and organic sales decline marred total sales in both the EMEA region and Asia, positive contributions from acquisition and organic growth drove the same for the Americas.
EnerSys’ operating earnings for the quarter totaled $51.9 million. Gross margin expanded 40 basis points to 26.6%. Improvements in gross margins came on the back of improved favorable product mix and benefits from restructuring programs.
Enersys Price, Consensus and EPS Surprise
Enersys Price, Consensus and EPS Surprise | Enersys Quote
Liquidity
At the end of the fiscal fourth quarter, EnerSys had cash and cash equivalents of $500.3 million, up from $467.1 million at the end of fiscal third-quarter 2017. The company’s long-term debt was $587.6 million, inching down from $600.6 million at the end of the fiscal third quarter.
During the quarter, net cash from operating activities came in at $246.0 million compared with $307.6 million recorded in the prior-year quarter.
Guidance
Concurrent with the earnings release, EnerSys slashed its fiscal first-quarter 2018 guidance, wherein it expects adjusted earnings per share to lie in the range of $1.10–$1.14, from the earlier guided range of $1.21–$1.25. This guidance excludes projected charges of 4 cents from restructuring programs and 1 cent from acquisition related expenses.
The recent price increases administered by the company are taking longer than expected to take hold, which, in turn, is attributable to the drab guidance. Also, EnerSys anticipates higher commodity cost pressure during the fiscal first quarter to weigh down on the financials.
Our Take
EnerSys ended fiscal fourth-quarter 2017 on a decent note, with both top- and bottom-line beats and impressive year-over-year growth. Going forward, the company believes its long-term growth drivers are intact, which will continue to drive growth for the fiscal 2018. These factors include robust motive power, aerospace and defense businesses. Also, telecommunications business is expected to act as a catalyst, driven by the rise of data usage.
However, the drab guidance for fiscal 2018 is unlikely to go down well with the investors. We believe that high seasonality in the demand of the company’s products, currency fluctuations and fall of commodity prices pose as major concerns that can thwart growth substantially. Also, softness in EnerSys’ motive power business is expected to put pressure on fiscal 2018 top-line performance.
Stocks to Consider
EnerSys currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are listed below:
Barnes Group Inc. (B - Free Report) has a solid earnings surprise history for the trailing four quarters, having beaten estimates thrice, for an average beat of 8.9%. It holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ACCO Brands Corporation (ACCO - Free Report) has a positive average earnings surprise of 79.7% for the last four quarters and currently holds a Zacks Rank #2.
Avery Dennison Corporation (AVY - Free Report) holds a Zacks Rank #2 and generated an average earnings surprise of 5.5% in the past quarters.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>