Energizer Holdings Inc.'s ENR shares are currently trading 12.4% below its 52-week high of $39.51 attained on Dec. 2, 2024, making investors contemplate their next moves. In the past six months, the stock has gained 17.2% compared with the Zacks industry’s 1.3% growth.
The company’s enhanced operational efficiency and growth initiatives have also helped it to outperform the broader sector and the S&P 500 index’s decline of 0.8% and growth of 6.8%, respectively, during the same period.
ENR Stock Past Six-Month Performance
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This leading manufacturer and distributor of batteries and lighting products closed yesterday’s trading session at $34.61. The stock is trading above both its 100 and 200-day simple moving averages of $32.81 and $30.68, respectively, highlighting a continued uptrend.
ENR Trades Above 100 & 200-Day Moving Averages
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Energizer's Strategic Approach to Growth and Efficiency
Energizer is pursuing sustainable growth through strategic initiatives designed to strengthen consumer engagement, boost brand loyalty and expand market share, all while maintaining a focus on margin enhancement. Central to this success is the company’s Project Momentum, which has delivered substantial cost savings and operational improvements.
In the fourth quarter of fiscal 2024, Project Momentum contributed to a 220-basis-point increase in the adjusted gross margin, supported by approximately $18 million in cost savings and favorable input costs, including lower commodity and material prices. Energizer’s disciplined financial management provides a strong platform for sustained growth and inspires confidence in its long-term potential among investors.
To support ongoing global revenue growth, Energizer is expanding its distribution network. This involves forming new retail partnerships and increasing shelf space with existing customers as well as enhancing its presence both in domestic and international markets. Additionally, the company’s e-commerce channel, which recorded a 15% sales increase in fiscal 2024, is poised for further growth through investments in digital tools and an improved online product assortment, helping it capture a larger share of the U.S. battery market.
ENR’s Strong FY25 Outlook Highlights Promising Growth
Energizer has shared an optimistic fiscal 2025 outlook, reflecting confidence in its growth trajectory. For the first quarter, the company projects organic revenue growth to be in the band of 2-3% year over year, accompanied by a 50-100 basis-point improvement in the adjusted gross margin. Adjusted earnings per share (EPS) are expected to be in the range of 60- 65 cents, representing mid-single-digit growth from the prior year.
For the full fiscal year, Energizer foresees organic revenue growth to be in the band of 1- 2%, driven by enhanced distribution in its Battery and Auto Care segments. The company anticipates a 50-basis-point increase in the adjusted gross margin, exceeding 41%, with adjusted EBITDA projected to be between $625 million and $645 million.
Adjusted EPS is forecasted to be between $3.45 and $3.65, underscoring the company’s commitment to sustainable growth and operational excellence. Our estimate for ENR’s fiscal 2025 adjusted gross margin is pegged at 41.4%, indicating a year-over-year increase of 50 basis points.
Does Energizer Stock Seem Attractive?
From a valuation perspective, Energizer’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 9.51, which is below the five-year median of 10.42 and the industry’s average of 22.94, the stock offers compelling value for investors seeking exposure to the sector. Moreover, the stock currently has a Value Score of A, thus further validating its appeal.
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Estimate Revisions Favor ENR Stock
Analysts have responded positively to Energizer's prospects, as indicated by the upward revisions in the bottom-line estimate. In the past 30 days, analysts have increased their estimates for the current fiscal year by a penny. The consensus estimate for earnings is pegged at $3.58 per share.
The consensus estimate for earnings for the next fiscal year has been raised 3 cents to $3.82 per share. The Zacks Consensus Estimate for the current and next fiscal year’s sales is pegged at $2.93 billion and $2.97 billion, respectively, indicating year-over-year growth of 1.3% and 1.5%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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ENR’s Rising SG&A Expenses & Currency Headwinds Pose Hurdles
Energizer is navigating rising SG&A expenses, primarily due to higher labor, benefits and inflation-related costs. In the fiscal fourth quarter, adjusted SG&A expenses increased 6.5% year over year to $123 million. This growth was fueled by elevated labor costs, travel expenses, depreciation linked to digital transformation initiatives and higher legal fees. Adjusted SG&A, as a percentage of net sales, rose to 15.3% from 14.2% in the same period last year.
For fiscal 2025, management projects SG&A expenses to rise by $15 million to $20 million from the prior year. This upward trajectory underscores potential margin pressures if revenue growth does not keep pace. We anticipate the adjusted SG&A costs to rise 3.2% year over year and this metric, as a rate of net sales, to increase 30 basis points year over year to 16.7% in fiscal 2025.
Adding to these challenges, the strengthening U.S. dollar has introduced unexpected currency headwinds. For the first quarter of fiscal 2025, management estimates a 100-150 basis-point drag on the top line, which is expected to reduce EPS by approximately three cents-five cents. Although some currency-related impacts were factored into the fiscal 2025 guidance, the recent acceleration in dollar strength presents additional pressure on near-term performance.
Final Thought on ENR
Energizer’s focus on operational efficiency, exemplified by Project Momentum, continues to enhance margins and generate cost savings. The company’s expansion of its distribution network and e-commerce capabilities positions it to capitalize onglobal marketopportunities. Furthermore, its strong fiscal 2025 outlook, including projected revenue growth and improved profitability, reflects confidence in its ongoing initiatives. While challenges like rising SG&A expenses and currency headwinds persist, the stock’s attractive valuation, supported by positive analyst sentiment and upward estimate revisions, provides reassurance to long-term investors seeking stability and growth potential. The company currently carries a Zacks Rank #3 (Hold).
Key Picks
Here, we have highlighted three better-ranked stocks, namely Ingredion Incorporated INGR, BRF Brasil Foods SA BRFS and Freshpet Inc. FRPT.
Ingredion is an ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank ( Strong Buy) stocks here.
INGR delivered a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for INGR’s current financial-year earnings indicates growth of 12.4% from the year-ago number.
BRF Brasil Foods, formerly Perdigao S.A., is a Brazil-based food company. It presently carries a Zacks Rank of 2. BRFS delivered a trailing four-quarter average earnings surprise of 51.5%.
The Zacks Consensus Estimate for BRF's current financial-year earnings and sales indicates growth of 260% and 14.7%, respectively, from the year-ago figures.
Freshpet Inc. manufactures and markets natural fresh foods, refrigerated meals and treats for dogs and cats in the United States and Canada. It has a Zacks Rank of 2 at present.
The Zacks Consensus Estimate for Freshpet’s current financial-year earnings and sales indicates growth of 228.6% and 27.2%, respectively, from the year-ago figures. FRPT delivered a trailing four-quarter average earnings surprise of 144.5%.
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Ingredion Incorporated (INGR) : Free Stock Analysis Report
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