After reviewing Energizer's ENR fourth-quarter results in more detail, we are modestly lowering our fair value estimate for the firm's shares. While we had forecasted weakness in the company's household battery segment, we underestimated the impact of negative foreign exchange translation for the fourth quarter and full year. Unfavorable currency reduced revenues in the battery segment by 3.7% during the quarter to $113 million, but roughly 47.0% of the $36.5 million decline in segment profits was due to unfavorable currency. Results in the firm's personal care division were positive, however, with sales 2.0% higher than the year-ago quarter excluding currency and acquisition related sales. With the newly acquired Edge and Skintimate brands now with Energizer, the quarter included some acquisition related expenses, and more significantly, restructuring related charges as the firm continues its efforts to reduce costs. These charges, coupled with further share dilution from the firm's earlier equity offering, contributed to the 68% decline in earnings per share. Energizer's management provided few predictions for 2010 beyond expectations for low-double-digit growth in net earnings. We expect conditions in the battery category to remain challenging through 2010, while we forecast sales in the firm's personal care business to show modest improvement. As the impact of unfavorable currency eases, however, and Energizer laps some very weak comparable periods, we are modeling mid-single-digit top-line sales growth and improved segment profit margins. Despite Energizer's very difficult quarter and fiscal year we believe that there is still growth ahead for the firm's household battery business and that the dramatic decline in sales of the past year is not representative of longer-term trends.
Get our full take on
Energizer Holdings, Inc.
See our complete company report and outlook--including fair value estimate, consider buying and selling prices, risk rating, bull and bear arguments,
and star rating--with a free two-week Morningstar.com Premium Membership trial.
You will also get complete access to all 2,000 Stock Analyst Reports, 2,000 Mutual Fund Analyst Reports, and Morningstar's award-winning Portfolio Management and Screening tools.
Start my free trial
Learn more about Premium Membership
View Sample Analyst Report
More Analyst Research
Energizer Holdings, Inc. Full Analyst Report
Analyst Notes
11-03-09 | 9:18AM Placing Energizer under Review
07-29-09 | 9:35AM Positive Signs in Energizer's 3Q
05-26-09 | 1:20PM Lowering Energizer's Fair Value
05-11-09 | 9:18AM Energizer under Review
| 
