Prestige Consumer Healthcare’s PBH dedication to brand building is poised to drive growth in the upcoming quarters. The company’s portfolio expansion through strategic acquisitions looks encouraging. Meanwhile, a fierce competitive pressure and solvency issues weigh on Prestige Consumer’s operations.

In the past year, this Zacks Rank #3 (Hold) company’s shares have rallied 19.3% compared with the industry and the S&P 500 composite’s growth of 10.8% and 11.1%, respectively.

The renowned consumer healthcare product company has a market capitalization of $4.17 billion. PBH reported an earnings surprise of 5.17% in the last reported quarter.  The company has an earnings yield of 5.4% compared with the industry’s 0.3%. 

Let’s delve deeper.

Upsides for PBH Stock 

Strength of a Diversified Portfolio: Prestige Consumer Health owns and markets a diverse portfolio of well-recognized consumer brands. The products benefit from robust marketing strategies that are designed to enhance sales growth and long-term profitability across major and core brands. The company’s core brands together generated nearly 58.6% of the total revenues in fiscal 2024. 

PBH’s fast-growing gastrointestinal (GI) product category represents nearly one-fifth of North American sales. The portfolio is headlined by three iconic GI brands — Dramamine, Fleet and Gaviscon. The Eye & Ear Care category includes a wide assortment of leading brands like Clear Eyes, TheraTears and Debrox.  In the third quarter of fiscal 2025, the company recognized sequential sales growth in Clear Eyes despite supply chain-related limitations within the business. Additionally, Prestige Consumer is experiencing impressive growth in the e-commerce channel, continuing the long-term trend of growing online purchases.

Acquisitions Aid Growth: In the past few years, the company has expanded its brand portfolio both organically and through acquisitions. It acquired TheraTears and four other over-the-counter consumer brands across the VMS and Cough & Cold categories from the 2021 acquisition of Akorn Operating Company LLC. PBH also acquired Hydralyte (an over-the-counter oral rehydration brand in Australia) from the Hydration Pharmaceuticals Trust of Victoria, Australia. 

The strong and diverse portfolio of products has provided Prestige Consumer with multiple sources of growth and minimized the impact of any individual category slowdowns.  Moreover, this diversity extends beyond just brands to encompass the diversity of channels, geographies, and suppliers, each of which benefits the company’s business during periods of uncertainty and volatility.

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Concerns for PBH Stock

Debt Profile: At the end of the fiscal third quarter, Prestige Consumer had a long-term debt of $996 million, while cash and cash equivalents totaled $51 million. Although the company does not have any near-term debt payable, the debt-to-capital ratio stood moderately leveraged at 35.8%, while times interest earned was 6.3. This suggests that the company might face difficulty in paying off its interest obligations.

Currency Fluctuations: The company generally relies on brokers and distributors for the sale of its products in foreign countries, having generated approximately 14.8% of fiscal 2024 revenues from its international business. Hence, fluctuating foreign exchange rates remain a concern, which could result in unfavorable price increases for the company’s products or lead to higher costs for certain products purchased from its foreign third-party manufacturers. 

PBH Stock Estimate Trend

In the past 30 days, the Zacks Consensus Estimate for PBH’s fiscal 2025 earnings per share has moved north 0.4% to $4.52.

The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $1.13 billion, implying an increase of 0.5% from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Boston Scientific BSX and Cardinal Health CAH.

Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 62.2% compared with the industry’s 17.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.06%. The company’s shares have surged 73.5% compared with the industry’s 9.5% growth in the past year.

PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 2.7% compared with the industry’s 1.5%. Shares of the company have rallied 47.1% compared with the industry’s 9.5% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.7% compared with the industry’s 9.5%. Shares of the company have rallied 17.5% against the industry’s 3.2% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.64%.

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This article originally published on Zacks Investment Research (zacks.com).

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