Energizer Holdings Inc (ENR, Financial) recently experienced a notable daily loss of -6.76%, and over the last three months, the stock has seen a slight decrease of -1.15%. With a Loss Per Share sitting at $3.42, investors are keen to understand whether this stock is fairly valued. This article delves into a thorough valuation analysis of Energizer Holdings Inc (ENR) to determine its true market value.
As we explore the intricacies of Energizer Holdings' valuation, we invite our readers to engage with the following analysis, which will provide a clearer picture of whether the stock's current price reflects its intrinsic value.
Company Introduction
Energizer Holdings Inc makes and distributes household batteries and lighting products, with a significant presence in the Americas. The company's current stock price stands at $33.68, hovering near the Fair Value (GF Value) of $35.42, an estimation of its fair value. This close proximity between the stock price and GF Value suggests that Energizer Holdings may be trading at a price that reflects its true worth, but let's delve deeper to confirm this preliminary assessment.
Summarize GF Value
The GF Value is a proprietary calculation that aims to determine the intrinsic value of a stock. It is based on historical trading multiples, a GuruFocus adjustment factor that accounts for past performance and growth, and projected future business performance. This GF Value Line is a benchmark, suggesting where the stock price should ideally be.
According to the GF Value Line, Energizer Holdings (ENR, Financial) appears to be fairly valued. The stock's current price of $33.68 per share aligns closely with the GF Value, indicating that the long-term return of its stock is likely to mirror the rate of its business growth.
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Financial Strength
Investors must consider a company's financial strength before investing, as it can significantly impact the risk of capital loss. Energizer Holdings' cash-to-debt ratio of 0.07 ranks it lower than the majority of its peers, indicating a potentially weak balance sheet. This is a critical factor to consider in our overall assessment of the company's value.
Profitability and Growth
Consistent profitability is an attractive trait for potential investors, as it typically indicates less risk. Energizer Holdings has maintained profitability over the past decade, with an operating margin of 13.42%, ranking well within its industry. However, when it comes to growth, the company's performance over the past three years has been less impressive, falling behind more than half of its industry counterparts.
ROIC vs WACC
An effective way to gauge a company's profitability is to compare its Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). Energizer Holdings' ROIC of 8.51 is higher than its WACC of 5.99, suggesting the company is creating value for its shareholders. This is a positive indicator in our valuation analysis.
Conclusion
In summary, Energizer Holdings (ENR, Financial) appears to be fairly valued. While the company's financial health may not be optimal, its profitability is reasonable, and its ability to create shareholder value is evident. However, its growth rate does lag behind many competitors in the Industrial Products industry. For a more detailed financial overview, interested investors can review Energizer Holdings' 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
