Business Insights Into One Battery Stock – ENR

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®.

Q1FY22 Result Performance (For the Quarter Ended 31 December 2021)

• The net sales stood at $846.3 million in Q1FY22, primarily driven by strong demand and pricing actions.
• The gross margin reduced to 36.8% in Q1FY22 from 39.8% in Q1FY21, owing to higher operating costs, consistent with ongoing inflationary trends.
• Earnings per share stood at $0.83, and adjusted earnings per share stood at $1.03 for Q1FY22.

Source: Analysis by Kalkine Group

Key Update

• On 8 March 2022, the company declared the fruitful completion of the previously announced $300 million offering of 6.500% senior notes due 2027.

Outlook

The company forecasts net sales to be flat, adjusted earnings per share between $3.00-$3.30 and Adjusted EBITDA of $560-$590 million for FY22. The prevailing operating environment remains highly volatile. Going forward, the company will leverage its brands, as well as breadth of its portfolio and the strength of its organization to achieve success in the short, medium, and long-term.

Key Risks

The company is exposed to the risk of currency fluctuations, which may adversely hurt its financial performance. Volatility in production costs primarily the raw material prices, could erode its profit margins. Further, the risk of changes in the retail environment and consumer preferences also remain a major concern. Moreover, it faces the risk of supply chain disruption due to its reliance on certain significant suppliers.

Valuation Methodology: EV/Sales Based Relative Valuation (Illustrative)

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Stock Recommendation

The stock has been valued using an EV/Sales multiple-based illustrative relative valuation and the target price so arrived reflects a rise of low double-digit (in % terms). A slight premium has been applied to EV/Sales Multiple (NTM) (Peer Average) considering resilient demand, decent FY22 guidance and focused pricing strategy and cost management.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the aforementioned factors, we give a “Buy” recommendation on the stock at the closing market price of $29.85 per share, down by 2.58% on 23^rd March 2022.

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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.