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Bank of America/Merrill Lynch Downgrades Edgewell Personal Care

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Sep. 14 2016, Updated 9:56 a.m. ET

Price movement

Edgewell Personal Care (EPC) has a market cap of $4.6 billion. It fell 0.93% to close at $76.29 per share on September 12, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.9%, -5.0%, and -2.7%, respectively, on the same day.

EPC is trading 3.2% below its 20-day moving average, 6.8% below its 50-day moving average, and 4.0% below its 200-day moving average.

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Related ETF and peers

The SPDR S&P 400 Mid-Cap Value ETF (MDYV) invests 0.40% of its holdings in EPC. The ETF tracks a market cap–weighted index of US stocks. The index uses three factors to select value stocks from the 400 stocks chosen by the S&P Committee. The YTD price movement of MDYV was 12.7% on September 12.

The market caps of Edgewell Personal Care’s (EPC) competitors are as follows:

  • Estée Lauder (EL) — $32.7 billion
  • Clorox (CLX) — $16.6 billion
  • Church & Dwight (CHD) — $12.5 billion

EPC’s rating

Bank of America/Merrill Lynch has downgraded Edgewell Personal Care Company to “neutral” from “buy.”

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Performance in fiscal 3Q16

Edgewell Personal Care (EPC) reported fiscal 3Q16 net sales of $645.1 million—a fall of 4.1% compared to net sales of $672.9 million in fiscal 3Q15. Sales of the Wet Shave, Sun and Skin Care, and Feminine Care segments fell 1.3%, 1.3%, and 6.7%, respectively, in fiscal 3Q16 compared to sales in fiscal 3Q15. The company’s gross profit margin rose 0.37% in fiscal 3Q16 compared to fiscal 3Q15.

Its net income and EPS (earnings per share) rose to $36.7 million and $0.61, respectively, in fiscal 3Q16. This compares to -$72.5 million and -$1.17, respectively, in fiscal 3Q15. EPC reported adjusted EPS of $0.66 in fiscal 3Q16, a rise of 53.5% compared to fiscal 3Q15.

Edgewell Personal Care’s cash and cash equivalents fell 2.9% and its inventories rose 0.24% in fiscal 3Q16 compared to fiscal 4Q15. Its current ratio and debt-to-equity ratio fell to 1.7x and 1.6x, respectively, in fiscal 3Q16, compared to 2.5x and 1.7x, respectively, in fiscal 4Q15.

Projections

Edgewell Personal Care (EPC) made the following projections for fiscal 2016:

  • net sales to fall 4%
  • adjusted EBITDA of $440 million–$450 million, including $10 million–$15 million of negative currency impact
  • net income in the range of $176 million–$185 million
  • adjusted EPS of $3.45–$3.60
  • adjusted effective tax rate in the range of 24%–26%
  • restructuring-related costs of $35 million–$40 million and $10 million–$15 million for fiscal 2016 and fiscal 2017, respectively
  • incremental restructuring savings of ~$15 million for fiscal 2016 and an additional $40 million–$50 million in combined savings in fiscal 2017 and fiscal 2018, respectively

In the next part, we’ll discuss Colgate-Palmolive (CL).

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