Energizer Holdings, Inc. ENR is set to report first-quarter fiscal 2016 results on Feb 3. Last quarter, it posted in line earnings. Let's see how things are shaping up for this announcement.
Factors to Consider
Since the last quarter, Energizer Holdings is reporting the operational results of its Household Product Division (comprising battery business) while the rest of the consumer brands business has been included in the operations of Edgewell Personal Care Co. EPC.
We believe that the expected decline in volumes in the Household product segment, unfavorable foreign exchange and increasing competition from peers are the near-term headwinds. In addition, the company has a debt burden of $1 billion resulting from the reorganization of the business. For 2016, the company expects spin off and restructuring expenses to be approximately $10 million to $15 million.
Also, the company has lowered its sales outlook for fiscal 2016 in the last quarter. The company expects unfavorable currency translations and deconsolidation of Venezuelan operations to negatively impact revenues.
Earnings Whispers
Our proven model does not conclusively show that Energizer will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Energizer has an earnings ESP of +3.03%. This is because the Most Accurate estimate stands at 68 cents while the Zacks Consensus Estimate is pegged lower at 66 cents.
Zacks Rank:Energizer has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some stocks that, as per our model, have the right combination of elements to post an earnings beat this quarter:
Avalonbay Communities Inc. AVB has an Earnings ESP of +0.51% and a Zacks Rank #2 (Buy).
Vornado Realty Trust VNO has an Earnings ESP of +4.65% and a Zacks Rank #2.
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