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EnerSys (ENS) Down 1.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·4 min read

It has been about a month since the last earnings report for EnerSys (ENS). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is EnerSys due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Enersys Q4 Earnings and Revenues Surpass Estimates

Enersys reported fourth-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of $2.08 per share, which surpassed the Zacks Consensus Estimate of $2.02. The bottom line surged 14.3% year over year due to lower sales costs.

Enersys’ total revenues of $911 million beat the consensus estimate of $900 million. The top line declined 8% year over year due to temporary spending pauses in telecom and broadband. Organic sales decreased 7% and foreign currency translation had an adverse impact of 1% on sales.

Segmental Discussion

The Energy Systems segment’s sales (accounting for 40.5% of total sales) were $369.4 million, down 19.4% year over year. The Zacks Consensus Estimate for segmental revenues was $378 million. Segmental revenues decreased due to capital spending pauses of telecommunication and broadband customers. Price/mix had a positive impact of 2% while foreign currency translation had an adverse impact of 2%.

The Motive Power segment generated revenues of $394.8 million (accounting for 43.3% of total sales), up 3% year over year. The consensus estimate for segmental revenues was $366 million. The upside was due to a 5% increase in organic sales, partially offset by a 1% unfavorable impact from acquisitions.

The Specialty segment’s sales were $132.6 million (accounting for 16.2% of total sales), down 1.1% year over year. The consensus estimate for the same was $145 million. Organic volume was flat year over year.

Margin Profile

EnerSys' cost of sales decreased 11.8% year over year to $656.4 million. Gross profit in the quarter increased 3.4% year over year to $254.3 million while the gross margin was up 300 basis points (bps) to 27.9%.

Operating expenses increased 7.7% year over year to $157.3 million. Adjusted operating earnings were up 2% to $109.2 million. The margin increased 120 bps year over year to 12%.

Balance Sheet and Cash Flow

At the end of the fourth quarter, EnerSys had cash and cash equivalents of $333.3 million compared with $346.7 million at the end of fiscal 2023. Long-term debt (net of unamortized debt issuance costs) was $802 million compared with $1.04 billion at the fiscal 2023-end.

EnerSys generated net cash of $457 million from operating activities in fiscal 2024 compared with $279.9 million in the year-ago period. Capital expenditure totaled $86.4 million compared with $88.8 million in the previous year’s period.

In fiscal 2024, ENS rewarded its shareholders with a dividend payout of $34.5 million, up 20.8% year over year.

Fiscal 2025 Guidance

For fiscal 2025, EnerSys expects adjusted earnings to be in the range of $8.55–$8.95 per share. Net sales are expected to be in the band of $3.7-$3.8 billion. The company expects capital expenditures to be approximately $100-$120 million.

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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, EnerSys has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise EnerSys has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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