The Energizer Bunny knows a good thing when he sees it. That's why Energizer Holdings (NYSE:ENR) decided to purchase Playtex Products (NYSE:PYX) last month. And now, as if to prove Energizer right, Playtex just booked another solid quarterly performance. Like its new parent company, it keeps going and going ...
A model of consistency, Playtex turned in its 14th consecutive quarter of sales growth. Net sales, excluding the impact of its own acquisition -- that of Hawaiian Tropic -- rose 13% over a year ago, and earnings grew 52% to $0.26 a share, excluding charges and gains from both periods. Sales in all of segments increased, with its key skin-care segment rising 15%, excluding Hawaiian Tropic. Its feminine-care line also performed well, with a 9% sales increase. Companywide, gross margin fell 100 basis points, to 53%, but that drop was expected because of the addition of Hawaiian Tropic's stable of lower-margin products, including private-label brands.
The Energizer deal has obvious benefits for both companies. For Energizer, it expands a product portfolio for a company known mostly for batteries and its Schick razors. It acquired Schick about four years ago, and annual sales have been expanding at a double-digit rate, to almost $1 billion, from $625 million at the time the deal was struck.
For Playtex, shareholders are getting a fair price -- $18.30 in cash per share, an 18% premium to the prior closing price. The company currently trades at 34 times earnings. By comparison, Kimberly Clark (NYSE:KMB) currently trades at a trailing P/E of 19.
What's more, Playtex products will benefit, since Energizer is more of a global company.
And for both entities, a larger combined company should create efficiencies and allow costs to fall, especially since the two company's products already tend to sell through the same distribution channels. True to the Bunny's slogan, it looks as though this company really is poised to keep going.
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Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.
