Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Energizer Holdings' Stock Jumped 19% This Morning

By Anders Bylund - Nov 13, 2019 at 11:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The maker of batteries and car-care products beat Wall Street's fourth-quarter estimates with enough force to make investors forgive a disappointing earnings target for fiscal year 2020.

What happened

Shares of Energizer Holdings ( ENR -0.38% ) surged as much as 19.1% higher on Wednesday morning, lifted by an impressive fourth-quarter earnings report. By 10:35 a.m. EST, the stock had settled down to a milder 12.1% gain. As a reminder, this is the maker of well-known battery brands like Energizer and Rayovac, as well as car-care products under names such as Armor All and STP.

So what

Energizer's fourth-quarter sales rose 57% year over year, mostly thanks to the buyouts of Spectrum Brands' ( SPB -0.95% ) battery and car-care operations in two separate deals, both of which closed in January of 2019, with a combined price tag of $3.25 billion. Adjusted earnings increased by 12% to $0.93 per share. Your average Wall Street analyst would have settled for earnings near $0.81 per share on sales in the neighborhood of $713 million.

A large pile of colorful AA batteries, seen from the plus-contact side.

Image source: Getty Images.

Now what

These results were impressive enough that investors forgave Energizer for issuing soft earnings guidance for the next fiscal year. The integration process appears to be running rather smoothly, but there's also a big downside to that story. The company is struggling under the weight of $2.5 billion in acquisition-related debt, which more than doubled Energizer's full-year interest expenses compared to 2018.

This isn't my favorite consumer goods stock by a long shot, but I do see value in the Spectrum Brands deals -- if the company can start to reduce the debt load someday soon.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Energizer Holdings, Inc. Stock Quote
Energizer Holdings, Inc.
ENR
$39.15 (-0.38%) $0.15
Spectrum Brands Holdings, Inc. Stock Quote
Spectrum Brands Holdings, Inc.
SPB
$99.02 (-0.95%) $0.95

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
633%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.