Energizer Holdings, Inc. (ENR) in  St. Louis, Miss., is one of the largest manufacturers and distributors of primary and specialty batteries and lighting products globally. The company operates through two segments: Americas; and International.

ENR pays $1.20 in dividends annually, yielding 3.49% on its current share price. The company’s forward dividend yield is 57.3% higher than the 2.22% industry average. Also, its 2.63% four-year average dividend yield is 7.6% higher than the 2.45% industry average. ENR is scheduled to pay its latest quarterly dividend of $0.30 on March 16, 2022.

Shares of ENR have declined 14.3% in price year-to-date, but the stock has risen marginally in price due to better-than-expected fiscal first-quarter results over the past five days.

Here is what could shape ENR’s performance in the near term:

Mixed Growth Story

ENR’s revenue has increased at an 18.9% CAGR over the past three years, while its EBITDA has risen at a 16.5% CAGR over this period. Its net income and EPS have grown at CAGRs of 14% and 5.2%, respectively, over the past three years. However, ENR’s levered free cash flow declined at a 75.6% rate per annum over the past three years and at51.7% rate over the past five years.

ENR’s trailing-12-month revenues increased 5.7% year-over-year, while its EPS rose 160.6% from the same period last year. However, the company’s trailing-12-month EBITDA has declined 2.1% over the past year, while its operating income declined 3% year-over-year. Also, ENR’s trailing-12-month levered free cash flow has declined 99.6% year-over-year.

Mixed Valuation

In terms of forward non-GAAP P/E, ENR is currently trading at 10.64x, which is 44.5% lower than the 19.15x industry average. Its forward Price/Sales and EV/EBITDA multiples of 0.81 and 10.18, respectively, are significantly lower than the 1.45 and 12.75 industry averages. And the stock’s 17.45 trailing-12-month PEG ratio is 21% lower than the 22.09 industry average.

However, ENR’s 5.14 forward Price/Book multiple is 57.9% higher than the 3.25 industry average. In addition, its 50.20 trailing-12-month Price/Cash Flow ratio is 242.6% higher than the 14.65 industry average.

Consensus Rating and Price Target Reflect Potential Upside

Of the six Wall Street analysts that rated ENR, three rated it Buy while three rated it Hold. The 12-month median price target of $43.67 indicates a 27% potential upside from yesterday’s closing price of $34.38. The price targets range from a low of $38.00 to a high of $58.00.

POWR Ratings Reflect Uncertainty

ENR has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a C grade for Quality, Stability, and Value. ENR’s 38.85% trailing-12-month gross profit margin is 13.6% lower than the 34.22% industry average. However, its 3.01% trailing-12-month ROA is 36.4% lower than the 4.73% industry average, justifying the Quality grade.

In addition, ENR’s relatively high 1.12 beta is in sync with the Stability grade. Also, the stock’s mixed valuation metrics justify the Value grade.

Among f the 61 stocks in the C-rated Home Improvement & Goods industry, ENR is ranked #46.

Beyond what I have stated above, view ENR ratings for Sentiment, Growth, and Momentum here.

Bottom Line

With a $2.04 billion market cap, ENR is a leading battery manufacturer with a global market presence. However, the global lithium shortage and supply chain disruptions have adversely impacted ENR’s earnings and cash flows. In fact, the company’s levered free cash flows have declined significantly over the past five years. With poor cash flows, ENR might not be able to sustain its quarterly dividend payouts in the coming quarters. Thus, we think investors should wait until ENR’s financials and cash flows improve before investing in the stock.

How Does Energizer Holdings, Inc. (ENR) Stack Up Against its Peers?

While ENR has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, Acuity Brands, Inc. (AYI), Masonite International Corp. (DOOR), and Duluth Holdings Inc. (DLTH), which have an A (Strong Buy) rating

.

ENR shares were trading at $34.42 per share on Wednesday morning, up $0.04 (+0.12%). Year-to-date, ENR has declined -14.16%, versus a -6.81% rise in the benchmark S&P 500 index during the same period.

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.

More...