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Here's Why You Should Retain EnerSys (ENS) in Your Portfolio Now

EnerSys ENS has been witnessing solid momentum in its Motive Power segment, supported by strong orders for its products in electric industrial forklift trucks market. The segment’s revenues increased 3% year over year in the fourth quarter of fiscal 2024 (ended March 2024). The global megatrends including 5G expansion, rural broadband build-outs, electrification, automation and decarbonization are expected to support the company’s growth in the quarters ahead.

EnerSys intends to strengthen and expand its businesses through buyouts. In April 2023, it acquired U.K.-based battery service and maintenance provider, Industrial Battery and Charger Services Limited (IBCS). The inclusion of IBCS enhanced its foothold in the U.K. market. Also, in May 2024, it inked a deal to acquire Bren-Tronics in an all-cash deal of $208 million. The acquisition should boost ENS’ position as a critical enabler of energy transition and support its growth in the growing military and defense end market.

ENS remains committed to rewarding its shareholders through dividend payouts and share buybacks. For instance, it paid out dividends of $34.5 million and repurchased shares worth $95.7 million in fiscal 2024. Its quarterly dividend rate was hiked by 29% in August 2023.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Over the past three months, this Zacks Rank #3 (Hold) company's shares have risen 18.4% compared with the industry’s growth of 9.1%.

However, EnerSys has been witnessing persistent weakness in the Energy Systems segment due to lower capital spending of the telecommunication and broadband customers. The segment’s revenues decreased 19.4% year over year in the fourth quarter of fiscal 2024. Lower demand in the network communications, and telecom and broadband markets remains a concern.

Given its substantial international operations, foreign currency woes might also hurt its top line in the quarters ahead. For instance, in the fiscal fourth quarter, foreign currency translation had an adverse impact of 1% on sales.

Key Picks

Some better-ranked stocks from the same space are presented below.

Powell Industries, Inc. POWL presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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POWL delivered a trailing four-quarter average earnings surprise of 66.9%. In the past 60 days, the Zacks Consensus Estimate for Powell Industries’ 2024 earnings has increased 19.9%.

AZZ Inc. AZZ sports a Zacks Rank #1 at present. AZZ delivered a trailing four-quarter average earnings surprise of 36%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 5%.

Emerson Electric Co. EMR presently carries a Zacks Rank of 2 (Buy). EMR delivered a trailing four-quarter average earnings surprise of 10.7%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 0.9%.

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Emerson Electric Co. (EMR) : Free Stock Analysis Report

AZZ Inc. (AZZ) : Free Stock Analysis Report

Enersys (ENS) : Free Stock Analysis Report

Powell Industries, Inc. (POWL) : Free Stock Analysis Report

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