Energizer Holdings, Inc. (ENR) is experiencing top-line growth both through organic growth in the razor blade and battery businesses and though the acquisition of Playtex. In addition, guidance for integration savings, originally estimated to be $57 million, was raised to $70 million. The management is incentivized with annual and two-year bonus plans and a stock incentive plan. To date, management has been successful in qualifying for performance-based awards. The stock is upgraded to a Buy.
The management focuses on product innovation, strategic expansion, the continued implementation of productivity programs and the prudent use of the company's cash flow. The company is committed to accelerating growth and gaining market share based on innovative new product launches across all categories. Positive cash flow has allowed management to return value to shareholders through share repurchases.
During the last five years, a period of relatively stable earnings growth, Energizer Holdings stock has traded in a P/E range of 11.9 to 22.5. At the current P/E of 14.1, we find the stock attractive despite the share repurchase program having been curtailed as management concentrates on lowering the debt level. We maintain the target price of $104.75, which is based on a 20 P/E on trailing 12-month earnings.
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