Why Energizer Holdings (ENR) Stock Is Gaining Before the Bell

NEW YORK (TheStreet) -- Energizer Holdings (ENR) stock is gaining in premarket trading on the news it will separate into two publicly traded companies.

Before the bell, shares have spiked 18.9% to $116.17.

In a statement, the company said its household products and personal care divisions will split into independent companies. The separation is expected to be completed in the second half of the 2015 fiscal year. 

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The household products business will hold Energizer's batteries and portable lighting products and is expected to report annual revenue of around $1.9 billion. 

Its personal care business which includes brands Schick, Carefree and Banana Boat is expected to generate annual revenue of around $2.6 billion. 

TheStreet Ratings team rates ENERGIZER HOLDINGS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENERGIZER HOLDINGS INC (ENR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
  • ENERGIZER HOLDINGS INC's earnings per share declined by 17.4% in the most recent quarter compared to 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, ENERGIZER HOLDINGS INC increased its bottom line by earning $6.46 versus $6.22 in the prior year. This year, the market expects an improvement in earnings ($7.03 versus $6.46).
  • 49.52% is the gross profit margin for ENERGIZER HOLDINGS INC which we consider to be strong. Regardless of ENR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.68% trails the industry average.
  • ENR, with its decline in revenue, slightly underperformed the industry average of 4.2%. Since the same quarter one year prior, revenues slightly dropped by 6.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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