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Energizer Could Disappoint on Fiscal Q2 Earnings amid Unhedged Logistics, Manufacturing Costs, RBC Says

05/07/2021 10:41

02:33 PM EDT, 05/07/2021 (MT Newswires) -- Energizer (ENR) will probably report lower earnings than the consensus estimate, due in part to costs that it has not hedged, according to a research note from RBC Capital Markets.

Market expects the company to report fiscal Q2 earnings per share of $0.60, but RBC analysts have pegged their expectations for EPS at $0.58. Their projection for net sales growth a 6.6% is in line with consensus.

RBC has an outperform rating on the stock and a $55 price target.

"Demand in ENR's end markets continues to be robust, particularly for batteries benefiting from increased distribution," according to the report. "On the inflationary front, ENR is 80% hedged on commodities. However, we are concerned about non-hedged costs such as transportation/freight/logistics/manufacturing."

For the rest of fiscal 2021, the firm will be lapping "significant" one-time incremental shipping costs, and expenses that were incurred last year to meet the "robust demand" for its products at the height of the coronavirus pandemic.

Energizer has international manufacturing facilities, including in the UK, Egypt, Singapore, and Indonesia, "While ultimately difficult to quantify, this is worth noting given the impacts of container shortages and congestion at the Suez Canal seen

globally."

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