Why Energizer's Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of battery maker Energizer Holdings (NYSE: ENR  ) jumped 10% today, after the company announced a restructuring.

So what: As usual, restructuring is really code for layoffs and, in this iteration, Energizer is planning to layoff 1,500 people, or 10% of its workforce. The company expects this to save $200 million pre-tax spending by 2014.

Now what: Demand fell in the most recent quarter, but Energizer is still a highly-profitable company, predicting $6.75 to $7.00 per share in earnings next year. Layoffs always make me nervous because it's either an indication that a company sees weaker sales ahead, or that it doesn't know how to grow its existing business. After all, more workers mean more sales can be done, and the opposite is true. I would be a seller today contrary to the markets move because I think it's a sign that long-term growth will be slow and potentially decline.

Interested in more info on Energizer? Add it to your watchlist by clicking here.

 

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2105531, ~/Articles/ArticleHandler.aspx, 12/19/2014 7:50:51 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement