Shares of Spectrum Brands Holdings (NYSE:SPB), a global consumer goods company with products in categories ranging from pet care to personal grooming, jumped more than 19% Wednesday morning after releasing fiscal 2019 fourth-quarter results that were better than expected.
Net sales checked in with a 1.9% increase to $993 million, compared with the prior year, which topped analysts' estimates calling for just over $990 million. Adjusted earnings per share increased 10.9% to $1.13, just enough to top analysts' estimates that called for $1.12 per share. Management also strengthened the balance sheet by reducing net leverage to 3.1 times from 5.2 times in the prior year.
In a press release, CEO David Maura said: "We believe our actions this year reflect decisions that will drive long-term value creation and sustainable growth. Our accomplishments included materially reducing net debt, closing on the divestitures of two business units and returning over $350 million to our shareholders."
The name of the game for Spectrum and its investors is stability and growth. Look for management to continue reducing debt levels and buy back shares while it tries to drive organic sales, EBITDA, and adjusted free cash flow higher in 2020. Also, look for the company's global productivity improvement plan to realize $100 million annual cost improvements at a full run-rate within the next 18 to 24 months.
Spectrum's fourth quarter was solid, and it took important steps to reduce net leverage, but management needs to continue innovating with its brands and products to consistently drive organic sales higher for the stock to break out of its three-year slump and become a great consumer staples investment.