Why Prestige Brands (PBH) Stock Is Up Today

NEW YORK (TheStreet) -- Prestige Brands Holdings (PBH) shares are up 2.7% to $27.33 in trading on Tuesday.

The stock's rise follows the announcement that the company had reached a deal to acquire the drink, Hydralyte, from The Hydration Pharmaceuticals Trust of Australia.

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Exact terms of the deal were not made immediately available, but the acquisition is set to double Prestige's Australian subsidiary's revenue to $50 million (AUD) for fiscal 2015.

Hydralte is the leading over-the-counter oral rehydration drink in Australia and New Zealand. 

TheStreet Ratings team rates PRESTIGE BRANDS HOLDINGS as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PRESTIGE BRANDS HOLDINGS (PBH) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for PRESTIGE BRANDS HOLDINGS is rather high; currently it is at 55.95%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PBH's net profit margin of 2.14% significantly trails the industry average.
  • PRESTIGE BRANDS HOLDINGS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PRESTIGE BRANDS HOLDINGS increased its bottom line by earning $1.28 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $1.28).
  • PBH, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 8.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Pharmaceuticals industry and the overall market, PRESTIGE BRANDS HOLDINGS's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: PBH Ratings Report
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