Company Overview: Energizer Holdings, Inc. (NYSE: ENR) is a global manufacturer, distributer and marketer of household batteries, portable lights, specialty batteries and automotive appearance, refrigerants, performance, and fragrance products. Its brands, such as Energizer and Eveready, are marketed and sold globally.

­­­­­­ENR Details

Material Business Updates

Figure 1: Recent Updates on Quarterly Dividends

Source: Company Filings, Analysis by Kalkine Group

Historical Financial Trend:

ENR illustrated sustainable historical growth while keeping the value proposition intact. The operating revenues have been growing since FY17, with a rebound in EBITDA margins after FY19. Operating revenues grew at a 14.5% CAGR (FY17 – FY21).

Figure 2: Historical Financial Overview

Source: Company Reports, Analysis by Kalkine Group

First Quarter FY22 Performance:

Figure 3: Quarterly Performance

Source: Company Filings, Analysis by Kalkine Group

Full-Year FY21 Performance:

Figure 4: Annual Performance

Source: Company Filings, Analysis by Kalkine Group

Top 10 Shareholders:

The top 10 shareholders together form ~59.89% of the total shareholding. The Vanguard Group, Inc. and BlackRock Institutional Trust Company, N.A., hold a maximum stake in the company at ~­­­10.31% and ~9.64%, respectively.

Figure 5: Top 10 Shareholders

Source: Analysis by Kalkine Group

Key Metrics:

A diversified product portfolio, synergies from acquisition strategies, and enhanced distribution reach resulted in consistent revenue growth over the past five years. However, the current ratio improved, owing to working capital requirements.

Figure 6: Key Financial Metrics

Outlook:

Figure 7: Outlook and FY22 Guidance

Source: Company Filings, Analysis by Kalkine Group

Key Risks:

Increased Input Cost Pressures: Despite ongoing cost controls, ENR is facing inflation pressure in materials, labour, and transportation, leading to deteriorating margins.

The Threat of Substitution: Concerns over increased rechargeable products may outweigh the use of battery cell products; hence, ENR has increasing exposure to the risk of substitution.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Stock Recommendation:

ENR has delivered 3-month and 6-month returns of ~-9.034% and ~-13.835%, respectively. The stock is trading below the average of the 52-week high price of US$52.85 and the 52-week low price of US$34.04, indicating an accumulation opportunity. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price with an upside of low double-digit (in % terms). The company might trade at a slight premium compared to its peers’ average EV/Sales (NTM trading multiple), considering the resilient demand and the company’s focus on additional pricing strategies. For valuation, a few peers like Kimberly-Clark Corp (NYSE: KMB), Clorox Co (NYSE: CLX), Spectrum Brands Holdings Inc (NYSE: SPB) and others have been considered. Considering the resilient battery demand, working capital management strategies to cater for demand, steady growth prospects, and potential upside as indicated by the valuation, we give a “Buy” recommendation on the stock at the closing market price of $34.94, as of 07 February 2022, up by ~2.31%.

ENR Daily Technical Chart (Source: REFINITIV)

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.