Helen of Troy Limited’s HELE shares have gained an impressive 37.4% in the past three months, outperforming both the industry’s decline of 17.6% and the broader S&P 500 index’s growth of 9.4%. This strong performance can be attributed to the company’s focus on strengthening core operations, refining its growth portfolio and executing key initiatives like Project Pegasus and its Elevate for Growth strategic plan.
HELE Stock Past Three-Month Performance
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HELE stock last traded at $73.79 and is 42.3% below its 52-week high of $127.83, touched on Feb. 28, 2024. This presents a compelling opportunity for value-focused investors, as the company steadily regains ground. The recent rally indicates the effectiveness of Helen of Troy's strategic initiatives and a strong market position, setting the stage for further growth.
The stock is trading above its 50-day moving average, which indicates robust upward momentum and price stability. This technical indicator underscores growing market confidence in HELE’s financial health and prospects.
Let us take a deeper dive into Helen of Troy's fundamentals, market position and prospects to assess the optimal course of action for investors. Should they invest more or hold their current position? Let us analyze the situation further.
Decoding HELE’s Strategies
Helen of Troy is focused on long-term strategic initiatives aimed at strengthening core operations and refining its growth portfolio. By adopting a data-driven approach, the company has been enhancing brand fundamentals and improving performance. Its expansion into key international markets and optimization of distribution networks are expected to drive sales growth. Helen of Troy remains steadfast in its commitment to delivering sustainable and profitable growth through agile responses to evolving consumer trends and market dynamics.
The company’s focus on refining its portfolio is also evident from HELE’s practice of making meaningful acquisitions. In a recent move, HELE announced plans to acquire Olive & June, LLC, an omnichannel nail care brand. The deal, which is expected to close by the end of 2024, is aimed to strengthen Helen of Troy’s presence in the multi-billion-dollar beauty industry and diversify its product offerings.
Helen of Troy is advancing its global restructuring plan, Project Pegasus, which is on track to generate crucial resources for reinvesting in the company’s brands. This reinvestment, coupled with strengthened brand fundamentals, has been driving improvements in marketing through innovative creative approaches, more agile media campaigns, enhanced product innovation and better execution.
HELE has been making strong progress with its multi-year Elevate for Growth strategic plan, designed to build on the foundation of the Transformation era by harnessing new ideas and capabilities. The plan focuses on enhancing brand building, strengthening retailer partnerships and utilizing the company’s scale and operational strengths.
Estimate Revisions Favoring HELE
Indicating the positive sentiment around Helen of Troy, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past seven days, analysts have increased their estimates for the current and the next-fiscal year by 2 cents to $7.20 and 12 cents to $7.74 per share, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
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HELE Stock Valuation
Despite this uptick in the stock price, Helen of Troy is currently trading at a discount to its historical and industry benchmarks. HELE’s forward 12-month price-to-earnings (P/E) multiple is 9.7X, below its median level of 11.86X in the past year and lower than the industry’s multiple of 26.85X. This implies that, relative to its earnings potential, HELE stock might still be undervalued. For investors, this presents an attractive opportunity, which is further underscored by HELE’s current Value Score of A.
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What May Pull Back Helen of Troy’s Momentum?
Helen of Troy has been navigating a challenging macroeconomic environment, with reduced consumer spending and weaker retailer demand. As consumers prioritize essential over discretionary purchases, the company’s second-quarter fiscal 2025 results showed year-over-year declines in both top and bottom lines. This drop in sales was mainly due to weaker performance in the Beauty & Wellness segment, particularly in hair appliances, air purifiers and humidifiers, caused by softer consumer demand and increased competition in these categories.
Helen of Troy has been facing rising SG&A expenses for some time. In the second quarter of fiscal 2025, this increase in the consolidated SG&A ratio was due to higher marketing expenses as the company reinvested in its brands, along with increased distribution center costs related to automation challenges at the Tennessee facility. Unfavorable operating leverage also contributed to the rise. These factors were partially offset by lower personnel expenses, including reduced annual incentive compensation.
For the third quarter of fiscal 2025, the company expects sales to decline 1-4.5%. Management anticipates adjusted earnings per share to decline 3-10% in the fiscal third quarter.
Helen of Troy Stock Analysis
Helen of Troy stock has shown resilience, bolstered by its strategic initiatives and strong market positioning. Despite ongoing macroeconomic challenges, the company’s focus on brand innovation, along with its Project Pegasus and Elevate for Growth plans, positions HELE for growth. While an impressive valuation and positive market sentiment make HELE look attractive, the near-term concerns may keep investors somewhat cautious. All said current investors are likely to benefit from holding, while new buyers could wait for a better time to enter the stock. Currently, Helen of Troy carries a Zacks Rank #3 (Hold).
Stocks to Consider
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INGR delivered a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current-financial year earnings indicate growth of 12.5% from the year-ago reported number.
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The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings indicates growth of 6.4% and 18.6%, respectively, from the prior-year reported levels.
Tyson Foods, Inc. TSN together with its subsidiaries, operates as a food company worldwide. It operates through four segments: Beef, Pork, Chicken and Prepared Foods. It currently carries a Zacks Rank #2. TSN delivered a trailing four-quarter earnings surprise of 57%, on average.
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales and earnings indicates growth of 2% and 12.9%, respectively, from the prior-year reported levels.
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