Yahoo Finance EnerSys (ENS) to Report Q4 Earnings: What's in the Offing?
EnerSys ENS is scheduled to release fourth-quarter fiscal 2022 (ended March 2022) results on May 25, after market close.
ENS’ earnings surpassed estimates thrice in the last four quarters and missed the mark once, the surprise being 0.8%, on average. Its third-quarter fiscal 2022 (ended December 2021) earnings of $1.01 per share beat the Zacks Consensus Estimate of 99 cents by 2%.
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In the past three months, shares of the company have lost 11.5% compared with the industry’s decline of 10.3%.
Factors at Play
EnerSys’ results for the fiscal fourth quarter are likely to have been affected by the softness in its power systems end market amid the supply-chain constraints. Also, weakness in ENS’s original equipment manufacturer (OEM) motive power end market is expected to have been a headwind in the to-be-reported quarter.
ENS has been dealing with the adverse impacts of increasing cost of sales and operating expenses for a while. In the fiscal third quarter, its cost of sales increased 17.4% year over year, while Operating expenses jumped 10.8%, a trend that most likely continued in the fiscal fourth quarter. Also, in the quarter, ENS’s gross margin decreased 340 basis points (bps) while the operating margin fell 330 bps. Shortages of product components (semiconductors and resin) as well as high freight and tariffs plus labor constraints might have dented EnerSys’ margin and profitability in the fourth quarter of fiscal 2022.
EnerSys has been making multiple investments to boost growth over time. Although its investments bode well for the long term, high capital expenditure incurred might have suppressed its short-term liquidity in the to-be-reported quarter. For fiscal 2022, ENS expects capital expenditure of about $100 million, of which $52.4 million was incurred in the first three quarters of fiscal 2022.
ENS’s performance is exposed to risks arising from geopolitical issues, trade relations, unfavorable movements in foreign currencies and governmental policies, given its widespread presence. A stronger U.S. dollar might have hurt its overseas business in the fiscal fourth quarter.
However, EnerSys is expected to have benefited from strength across defense, transportation and lithium-based battery technology end markets in the fiscal fourth quarter. Also, ENS’ solid product offerings, its focus on product innovation (including lithium, Touch-Safe and DC fast charge) and strengthening demand are expected to have positively contributed to its performance in the fiscal fourth quarter.
The Zacks Consensus Estimate for revenues in the fiscal fourth quarter from the Energy Systems segment is currently pegged at $387 million, indicating growth of 10.9% from the last fiscal year’s quarterly reported figure. Also, the consensus estimate for Motive Power segment revenues is pegged at $369 million, indicating an increase of 10.8% from the last fiscal year’s quarterly reading. The consensus estimate for revenues from the Specialty segment stands at $144 million, suggesting growth of 9.1% from the last fiscal year’s quarterly tally.
The Zacks Consensus Estimate for ENS’s total revenues for the fiscal fourth quarter is currently pegged at $881 million, suggesting 8.2% growth from the last fiscal year’s quarterly reported number and a 4.4% increase from the quarter-ago reported number. The consensus estimate for earnings of $1.15 suggests a decline of 11.5% from the prior fiscal year’s quarterly levels and an increase of 13.9% sequentially.
Earnings Whispers
Our quantitative model does not predict a beat for EnerSys this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) increases the odds of an earnings beat. But that is not the case here, as we will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: EnerSys has an Earnings ESP of -1.31%, as the Most Accurate Estimate is pegged at $1.13, lower than the Zacks Consensus Estimate of $1.15.
Enersys Price and EPS Surprise
Enersys price-eps-surprise | Enersys Quote
Zacks Rank: EnerSys carries a Zacks Rank #4 (Sell).
Key Picks
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to beat on earnings this season:
Graco Inc. GGG has an Earnings ESP of +0.42% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Graco’s earnings is pegged at 68 cents per share for the second quarter of 2022. GGG’s shares have lost 13.9% in the past three months.
Deere & Company DE has an Earnings ESP of +0.57% and a Zacks Rank of 3, currently.
The Zacks Consensus Estimate for Deere’s earnings is pegged at $6.95 per share for the third quarter of fiscal 2022 (ending July 2022). DE’s shares have decreased 2.2% in the past three months.
Hubbell Incorporated HUBB has an Earnings ESP of +1.73% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for Hubbell’s earnings is pegged at $2.41 per share for the second quarter of 2022. HUBB’s shares have gained 6.4% in the past three months.
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