Why Energizer Holdings Inc. Shares Fell

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 thesis.

What: Shares of Energizer Holdings (NYSE: ENR  ) were running out of steam today, falling as much as 10% after the company turned in an underwhelming earnings report.

So what: The maker of batteries and other household products turned in adjusted earnings of $2.10 per share, $0.04 below estimates, and down from $2.20 a year ago. Revenue fell 6.6%, to $1.11 billion, missing the consensus at $1.16 billion. CEO Ward Klein blamed "heightened promotional activity" for the poor performance, and said that the Personal Care division was particularly weak. As a result of the slowdown, the company lowered its 2014 adjusted EPS guidance to $7.00-$7.25, below analyst estimates at $7.39.

Now what: Energizer is a company best known for selling batteries; perhaps investors' biggest concern should be the secular decline in that industry amid the rise of smartphones and other chargeable gadgets that have replaced battery-operated tools. The company has wisely diversified away from that area with moves into feminine care and other stable products, but flat growth is still likely to be the norm here, as analysts expect. Given those factors, it seems hard to find a compelling reason to invest in Energizer.

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  • Report this Comment On January 30, 2014, at 1:11 PM, sukhumvit20 wrote:

    Analysts and reporters alike are missing the big story here. Everyone is assuming declines in razor and blade units and dollars are the result of shaving habits, i.e, Movember. The real reason is the incredible success of on line marketers like Dollar Shave Club. If any one bothered to analyze the actual units shipped by on line razor and blade suppliers they would understand the drop in reported, audited data such as Nielsen. The real problem for both Energizer and P&G is the QUALITY of Dollar Shave Club is equal to, or in some cases, even better than there own! Energizer and P&G can no longer justify their rip-off prices. Continued explanations by CEO's that the drop is due to 1) shaving habits and/or 2) higher or lower promotional activity is pure baloney. They just aren't admitted to the real reason.

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