An In-Depth Analysis Of The Consumer Staples Sector
Below are excerpts from the report of our 13 pages on the consumer sector basis, with a focus on Energizer Holdings (ENR). Energizer has exposure to zinc prices, steel and silver.
Debt to capitalization is here a little high at 45%, but that will come down significantly in the coming years. We expect to hit $ 9.00 EPS by 2014-2015 and would attach a figure multiple of 10X to reach our target price of $ 90 for 2012-2013.
REC market capitalization is $ 5 billion, and it competes with Procter & Gamble (PG) (183 billion), and Spectrum Brands (SPB) (1.7 billion).It is difficult for investors to find the value of attractive names in the consumer sector, because there are only 100 names to choose from with market capitalization> $ 200 million and third of these names are trading at more 20X (ttm) Earnings ... third have not increased since 2006 ... income from one quarter of these names are highly leveraged long-term debt to capital> 50% ... could continue, but you get the point. When you run screens in this small group, most drop names. ENR is now trading at less than 12X estimates for next year from 15X to 14X PG and SPB.
Acquisitions, organic and inorganic expansion of the portfolio of personal care as a hedge against the secular trend of declining Batteries
Energizer has made its foray into personal care in 2003 with the acquisition of Schick-Wilkinson Business razor shaving Sword from Pfizer (PFE) and continuously expanded its portfolio for personal care brand. It was followed by the acquisition of Playtex in 2007, which in the Playtex feminine care (pads and wipes) and baby care (diapers) brands, and Banana Boat (sunscreen) and Hawaiian Tropic (Tanning lotions ) marks in the mix.The acquisition of Edge shaving gel Skintimate brands in 2009 helped the company to expand and consolidate his shaving business. The acquisition of American Safety Razor in 2010 Energizer has helped to expand its portfolio shaving razors and blades in the private label segment and get a greater share of the aisle shelf. With consumers trading down, private label store brands are a growing segment. In 2010, Energizer and executed a significant expansion of its successful organic gels prepared wet shave business with the introduction of Schick Hydro for both razors and shaving.From a pure drumming because of the incursion in the personal care business in 2003, the dependence of income on batteries has continued to fall at its current level of about 50%.
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