A month has gone by since the last earnings report for EnerSys (ENS). Shares have lost about 0.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is EnerSys due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Enersys reported second-quarter fiscal 2025 (ended Sept. 30, 2024) adjusted earnings of $2.12 per share, which surpassed the Zacks Consensus Estimate of $2.07. The bottom line increased 15% year over year.
Enersys’ net sales of $883.7 million missed the consensus estimate of $887 million. The top line declined 1.9% year over year due to headwinds in communications and transportation markets. Organic sales decreased 3%. While acquisitions boosted sales by 2%, price/mix had an adverse impact of 1%.
The Energy Systems segment’s sales (accounting for 43.2% of total sales) were $382.1 million, down 9.6% year over year. The Zacks Consensus Estimate for segmental net sales was $383 million. Net sales decreased due to capital spending pauses of telecommunication and broadband customers. While volume decreased 8%, price/mix had an adverse impact of 2% on sales.
The Motive Power segment generated net sales of $367 million (accounting for 41.5% of total sales), up 3% year over year. The consensus estimate for segmental net sales was $369 million. The upside was driven by a 3% increase in volume.
The Specialty segment’s sales were $135 million (accounting for 15.3% of total sales), up 9% year over year. The consensus estimate was $137 million. While volume declined 4%, acquisitions and price/mix had positive impacts of 12% and 1%, respectively on sales.
EnerSys' cost of sales decreased 3.5% year over year to $553.8 million. Gross profit increased 5.2% year over year to $252.1 million, while the adjusted gross margin was up 210 basis points (bps) to 28.7%.
Operating expenses increased 4.7% year over year to $150.5 million. Operating earnings were up 12.2% to $99.4 million. The operating margin increased 140 bps year over year to 11.2%.
At the end of the fiscal second quarter, EnerSys had cash and cash equivalents of $407.9 million compared with $333.3 million at the end of fiscal 2023. Long-term debt (net of unamortized debt issuance costs) was $1.2 billion compared with $801.9 million at the fiscal 2023-end.
EnerSys generated net cash of $44.1 million from operating activities in the fiscal first six months compared with $185.7 million in the year-ago period. Capital expenditure totaled $66.5 million compared with $35.9 million in the previous year’s period.
In fiscal 2024, EnerSys rewarded its shareholders with a dividend payout of approximately $18.6 million, up 14.1% year over year.
For fiscal 2025, EnerSys expects adjusted earnings to be in the range of $8.75–$9.05 per share compared with $8.80–$9.20 guided earlier. Net sales are now expected to be in the band of $3.675–$3.765 billion, lower than the previous projection of $3.735–$3.885 billion. The company expects capital expenditures to be approximately $100-$120 million. Tax rate is estimated to be in the band of 20–21%.
For the fiscal third quarter, the company anticipates adjusted earnings to be in the band of $2.20–$2.30 per share. Net sales are projected to be in the range of $920–$960 million.
In the past month, investors have witnessed a downward trend in estimates review.
Currently, EnerSys has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise EnerSys has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
EnerSys is part of the Zacks Manufacturing - Electronics industry. Over the past month, Eaton (ETN), a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended September 2024 more than a month ago.
Eaton reported revenues of $6.35 billion in the last reported quarter, representing a year-over-year change of +7.9%. EPS of $2.84 for the same period compares with $2.47 a year ago.
For the current quarter, Eaton is expected to post earnings of $2.82 per share, indicating a change of +10.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Eaton. Also, the stock has a VGM Score of B.
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