Energizer Holdings (ENR) Q4 Earnings: What's In The Cards?

Energizer Holdings, Inc. (NYSE:ENR) is set to report fourth-quarter fiscal 2016 results on Nov 9. Last quarter, it posted a positive earnings surprise of 10.34%. It has delivered an average positive earnings surprise of 32.24% over the trailing four quarters. Let's see how things are shaping up for this announcement.

Factors to Consider

Since the beginning of this fiscal year, Energizer Holdings has been reporting its operational results under the Household Product Division (comprising battery business) while the rest of the consumer brands business has been included in the operations of Edgewell Personal Care Co. (NYSE:EPC) .

Energizer has been innovating its product portfolio, cutting down on costs and making strategic acquisitions to boost its financials. In July this year, energizer acquired HandStands, a leading name car fragrance products space.

However, stiff competition from regional players is emerging as a big concern for Energizer. Also, unfavorable foreign exchange and deconsolidation of Venezuelan operations remain added concerns.

Following the buyout of HandStands, the company expects earnings per share in the fourth quarter to increase 4 cents to 5 cents. For the fourth quarter, adjusted earnings are estimated to be in the range of $2.20 to $2.30. The company expects to incur over $30 to $35 million as acquisition and integration related costs over the next 12 to 15 months with majority coming in the fourth quarter. The company expects to register $17 million to $19 million of acquisition costs in the to-be reported quarter.

For 2016, adjusted EBITDA is estimated to be $280 million to $300 million. The company now expects revenues to be down in low digits. Organic revenues are expected to be up in low single digits. Free cash flow is expected to be above $150 million and gross margin rate is also expected to decline by up to 250 bps.

Earnings Whispers

Our proven model does not conclusively show that Energizer will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Energizer currently has a 0.00% ESP because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 50 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Energizer has a Zacks Rank #2, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:

Lumos Networks Corp. (NASDAQ:LMOS) with an Earnings ESP of +100.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

EVINE Live Inc. (NASDAQ:EVLV) with an Earnings ESP of +50.00% and a Zacks Rank #2.

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