What happened
Diversey Holdings' (DSEY) shareholders trounced the market on Wednesday as the stock jumped 18% by 1:15 p.m. ET today compared to a 2.6% rally in the S&P 500. That move didn't erase the losses that investors have seen since the start of 2022, but it marked a potential shift in sentiment around the cleaning-product specialist's business.
A solid earnings report sparked the rally.
So what
Diversey said before the market opened today that sales rose 1% in the fiscal fourth quarter, barely meeting the outlook that CEO Phil Wieland and his team issued back in early November. The return to sales growth came with a few other positive developments, including rising profitability.
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The adjusted earnings margin landed at 15.7% for the full year, in fact, compared to 15.3% a year ago. Further gains are likely on this score, given that Diversey is planning to boost prices by about 6% in 2022 compared to a 4% increase in the most recent quarter.
Now what
Diversey is projecting a return to steady growth in 2022 after the pandemic injected intense volatility into the business. Sales should rise by the high single digits, executives said, to about $2.62 billion compared to this past year's flat result.
Earnings are expected to rise more quickly, consistent with management's goal of double-digit annual earnings growth. Those higher prices will help, but so will recent acquisitions in complementary markets like water treatment services and infection prevention.
A 7% to 9% sales increase isn't especially exciting as it would return Diversey just to the annual sales footprint it held two years ago. But investors had lower expectations heading into the earnings announcement, and so the stock recovered some of the losses it posted in the last few weeks.