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Why Energizer Holdings Stock Just Dropped 11%

By Rich Smith – Updated Nov 12, 2020 at 11:03AM

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Earnings miss in Q4 2020 -- and probably in 2021 as well.

What happened

Shares of battery manufacturer Energizer Holdings (ENR 0.68%) short-circuited in early Thursday trading, dropping 11.1% through 10:40 a.m. EST. The sell-off came in response to adjusted fourth-quarter earnings that came in below consensus this morning.

Analysts had forecast Energizer would earn $0.81 per share, pro forma, on sales of $747.2 million. In fact, Energizer beat that revenue forecast, collecting $763 million, but its earnings came up short at $0.59 per share, pro forma.

White arrow declining sharply atop a stock tickertape display bathed in red

Image source: Getty Images.

So what

Pro forma results also appear to overstate Energizer's profit, as the company suffered a quarterly loss of $0.67 per share when earnings are calculated according to generally accepted accounting principles (GAAP). For the year, however, Energizer remained profitable at $0.44 per share on a GAAP basis.

Sales for the fourth fiscal quarter grew a better-than-expected 6% in comparison to last year's final quarter, although this was a deceleration from the 10% sales growth Energizer enjoyed for the year as a whole.

Now what

Looking ahead to the fiscal year 2021 now underway, Energizer gave new guidance for sales growth ranging from 2% to 4%. Management did not give a GAAP earnings estimate for 2021, but did say that its adjusted earnings per share will range from $2.95 to $3.25. At the midpoint, this appears likely to fall short of analysts' projected $3.13. In addition to the Q4 earnings miss, this gives investors a second reason to want to sell Energizer stock today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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