Energizer Holdings (ENR) Q3 Earnings Beat, Revenues Miss

Energizer Holdings, Inc. (NYSE:ENR) reported mixed third-quarter fiscal 2017 results wherein adjusted earnings of 43 cents per share comfortably beat the Zacks Consensus Estimate of 37 cents and grew 34.4% year over year. However, revenues of $372 million missed the consensus mark of $391.5 million but grew 3% year over year. The year-over-year growth was driven by sales from auto care acquisition.

However, organic revenues decreased 2.6% year over year.

Quarterly Details

Batteries revenues fell 3.7% year over year to $325.8 million while revenues from Other segment more than doubled to $46.2 million.

In Americas, the company recorded revenues of $228.6 million, up 6.9% from last year’s quarter. Revenues from Europe, the Middle East and Africa region were $76.6 million, down 0.8%, and the Asia Pacific region recorded revenue decrease of 4.4% year over year to $66.8 million.

Gross margin decreased 10 basis points (bps), to 42.5%. Selling, general and administrative expenses as a percentage of net sales were 22.4% compared with 24.1% reported in the year-ago quarter.

Energizer Holdings, Inc. Price, Consensus and EPS Surprise

As of Jun 30, 2017, Energizer had cash and cash equivalents of $404.4 million compared with $287.3 million as of Sep 30, 2016. Long-term debt was $979.2 million compared with $981.7 million as of Sep 30, 2016.

For the nine months ended Jun 30, 2017, cash flow from operations came in at $145.6 million and free cash flow amounted to $155.3 million.

As of Jun 30, 2017, the company had repurchased shares worth $8.6 million. However, no shares were repurchased during the quarter.

Dividend payments in the quarter were approximately $17 million and approximately $52 million on a year-to-date basis.

Guidance

For fiscal 2017, Energizer now expects adjusted earnings per share in a band of $2.85–$2.90, up from $2.75–$2.85 projected earlier, which includes an anticipated 5.2% incremental contribution from the recently acquired auto care business.

Organic revenues are expected to be up in low-single digits. Free cash flow is expected to exceed $190 million and gross margin is expected to increase 125–150 bps up from earlier projection of 100–125 bps. Capex is expected in a range of $30–$35 million.

Stiff competition from regional players remains a major concern for Energizer. Moreover, forex volatility will continue to be a headwind for the company, reducing net sales by 1.5–2%.

Zacks Rank & Stock Price Movement

Currently, Energizer carries a Zacks Rank #2 (Buy).

In the last year, shares of Energizer have fallen 12.5% as against the industry’s decline of 5.4%.

Other Stocks to Consider

Better-ranked stocks in the broader tech space are Cutera, Inc. (NASDAQ:CUTR) , Identiv, Inc. (NASDAQ:INVE) and United States Cellular Corp. (NYSE:USM) . All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) Stocks here.

In the trailing four quarters, Cutera, Identiv and United States Cellular delivered average positive earnings surprises of 231.25%, 51.41% and 37.84%, respectively.

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