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Factors Likely to Influence Energizer's (ENR) Earnings in Q2

Energizer Holdings, Inc. ENR is slated to report second-quarter fiscal 2019 results on May 7, before market open. The company has outperformed the Zacks Consensus Estimate in three of the trailing four quarters by average of 4.2%.

How are Estimates Faring?

Energizer's earnings are likely to decline 51.1% year over year in the second quarter. This is quite evident from the Zacks Consensus Estimate for the quarter under review, which is pegged at 22 cents, significantly down from 45 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has moved up by a penny over the past 30 days.

For quarterly revenues, the consensus mark is pegged at $557.5 million, which indicates a sharp increase of 48.9% from the year-ago quarter. We note that Energizer total revenues decreased 0.2% in the last reported quarter.

Let’s delve deeper and find out the factors impacting the results.

Energizer Holdings, Inc. Price and EPS Surprise

Factors to Consider

Energizer remains focused on its core business and seeks to drive productivity for delivering solid performance. Moreover, cost containment actions and strategies to lower SG&A may provide some support to the bottom line. The company is making concerted efforts to drive revenue synergies on the back of its auto care business via expansion plans in North America apart from driving growth in international market.

Apart from these, Energizer’s acquisition of Global Battery and Lighting Business is likely to gain on the addition of well-known battery brands like Rayovac and Varta to its portfolio. In particular, the Varta brand will enhance the company’s footprint in Latin America. The takeover is also likely to expand Energizer’s battery manufacturing footprint and in turn help the company ramp up supply.

However, soft margins as well as high debt level remain matters of concern. Additionally, headwinds related to currency fluctuations and commodity costs cannot be ignored. Energizer is reeling under high level of debt for a while now. The company ended first-quarter fiscal 2019 with a long-term debt of $975.4 million that led to elevated interest expense of $48.2 million. Higher interest expense may hurt the company’s profitability.

What Does the Zacks Model Say?

Our proven model does not conclusively show that Energizer is likely to beat estimates in the to-be-reported quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Energizer has a Zacks Rank #3 but an Earnings ESP of -0.38% makes surprise prediction difficult.

Stocks With Favourable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Church & Dwight Co. CHD has an Earnings ESP of +1.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Campbell Soup Company CPB has an Earnings ESP of +2.17% and a Zacks Rank #3.

Kellogg Company K has an Earnings ESP of +1.01% and a Zacks Rank #3.

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