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| Hedge Funds World Japan (Photo credit: Michael Covel) |
Roepers told attendees at the Value Investing Congress that the maker of batteries, razors, and personal care products was his top investment idea. He expects the stock to reach $100 per share in the next six months to a year, up from about $75 currently.
Energizer Holdings’s third fiscal quarter ended in June, with the company reporting that revenue had declined 9% compared to the same period a year ago. Earnings, however, actually edged up; the company cut advertising costs, and several costs from the previous year related to restructuring and debt retirement were no longer in effect. Combined with the effects of share buybacks, earnings per share came in at $1.06 versus 94 cents a year earlier -- an increase of 13% despite the decline in sales. Over the first nine months of the fiscal year, revenue was about flat compared to the first three quarters of last year, but net income was up 36% and EPS were up 45%.
However, the stock has not been very responsive to these improvements in the company’s business. It is up 10% over the last year, underperforming the S&P 500. From a quantitative perspective, it seems about fairly priced based on its current business at 15 times trailing earnings. Obviously, if the company can continue increasing earnings per share at the recent historical rate, that is an excellent value for the growth. The sell-side expects an increase of only 6% in the next fiscal year, implying a forward P/E of 12. Energizer Holdings is also now paying a dividend yield of 2.1%. Overall we would say that it has to disappoint Street expectations -- which look quite achievable -- in order to prove overvalued or even at its intrinsic value. ... Continue to read.
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