Energizer Holdings Inc
ENR Details
Energizer Holdings Inc (NYSE: ENR) is one of the leading manufacturers of primary batteries and portable lighting products globally. Its key global brands include Energizer®, EVEREADY®, Rayovac®, and VARTA®.
Financial Results for the Second Quarter Ended 31 March 2022 (Q2FY22)
- The company posted resilient performance during the quarter with net sales of $685.4 million, compared to sales of $685.1 million in the prior corresponding period. Organic sales grew by 1.3% during the period, driven by pricing actions and new distribution across both battery and auto care.
- Gross margin declined to 34.8% in Q2FY22, from 39.5% reported in the prior corresponding period. The decline was on account of higher operating costs and ongoing inflationary pressure.
- The Group ended the period with a cash position of $213.2 million as of 31 March 2022.
Source: Company Reports, Analysis by Kalkine Group
Outlook
The company has upgraded its net sales outlook to low single-digit growth in FY22, bolstered by decent performance in H1FY22. It has reaffirmed its guidance for Adjusted earnings per share of $3.00 to $3.30 and Adjusted EBITDA of $560 million to $590 million.
Key Risks
The onset of recent geopolitical unrest between Russia and Ukraine has posed significant unrest globally. The company has been impacted by rising raw material prices and inflationary headwinds, and the uncertainty of adverse macro events still persists.
Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)
Stock Recommendation
Over the last six months, the stock has given a return of ~-14.95%. The stock is trading lower than the average price of 52-week low-high range for the stock at $29.01-$51.20, respectively.
The stock has been valued using EV/Sales multiple based relative valuation (on an illustrative basis). The target price so arrived reflects a potential fall of high single-digit (in % terms). A slight discount has been applied to EV/Sales Multiple (NTM) (Peer Average), considering the significant decline in margin performance and ongoing macro headwinds.
Considering the current trading levels and risks associated, we are of the view that it is prudent to book profits at the current levels. Hence, we give a “Sell” rating on the stock at the current price of $33.440 per share, as on 9.31 am New York Time, USA (GMT-4) as of 10 May 2022.
Technical Overview:
Daily Price Chart
Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)
Energizer Holdings, Inc. (ENR) is a part of Kalkine’s Global Fully Charged Product
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.
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