Stock Story -
Household products company Spectrum Brands (NYSE:SPB) reported results in line with analysts' expectations in Q4 FY2023, with revenue down 1.2% year on year to $740.7 million. Turning to EPS, Spectrum Brands made a non-GAAP profit of $1.36 per share, improving from its profit of $0.48 per share in the same quarter last year.
Is now the time to buy Spectrum Brands? Find out by reading the original article on StockStory.
Spectrum Brands (SPB) Q4 FY2023 Highlights:
- Revenue: $740.7 million vs analyst estimates of $739.7 million (small beat)
- Adjusted EBITDA: $113.7 million vs. analyst estimates of $86.4 million (big beat)
- EPS (non-GAAP): $1.36 vs analyst estimates of $0.99 (36.9% beat)
- Fiscal 2024 guidance: revenue (low single-digit percentage decline) below but Adjusted EBITDA (high single-digit percentage increase) ahead
- Free Cash Flow was -$528 million compared to -$91.7 million in the previous quarter
- Gross Margin (GAAP): 33%, up from 31.9% in the same quarter last year
- Organic Revenue was down 2.7% year on year
A leader in multiple consumer product categories, Spectrum Brands (NYSE:SPB) is a diversified company with a portfolio of trusted brands spanning home appliances, garden care, personal care, and pet care.
Household ProductsHousehold products companies engage in the manufacturing, distribution, and sale of goods that maintain and enhance the home environment. This includes cleaning supplies, home improvement tools, kitchenware, small appliances, and home decor items. Companies within this sector must focus on product quality, innovation, and cost efficiency to remain competitive.
Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options.
Sales GrowthSpectrum Brands is larger than most consumer staples companies and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's revenue has declined over the last three years, dropping 9.7% annually. This is among the worst in the consumer staples industry, where demand is typically stable.
This quarter, Spectrum Brands reported a rather uninspiring 1.2% year-on-year revenue decline, in line with Wall Street's estimates. Looking ahead, analysts expect sales to grow 1.2% over the next 12 months.
Organic Revenue GrowthWhen analyzing revenue growth, we care most about organic revenue growth. This metric captures a business's performance excluding the impacts of foreign currency fluctuations and one-time events such as mergers, acquisitions, and divestitures.
Spectrum Brands's demand has been falling over the last eight quarters, and on average, its organic sales have declined by 1.5% year on year.
In the latest quarter, Spectrum Brands's organic sales fell 2.7% year on year. This decrease was an improvement from the 7.3% year-on-year decline it posted 12 months ago. It's always great to see a business improve its prospects.
Key Takeaways from Spectrum Brands's Q4 Results Although Spectrum Brands, which has a market capitalization of $2.74 billion, has been burning cash over the last 12 months, its more than $1.86 billion in cash on hand gives it the flexibility to continue prioritizing growth over profitability.
We were impressed by how significantly Spectrum Brands blew past analysts' Adjusted EBITDA and EPS expectations this quarter. That stood out as a positive in these results. The company's fiscal 2024 outlook was mixed, with revenue missing but Adjusted EBITDA guided above. Overall, this was a solid quarter for Spectrum Brands. The stock is flat after reporting and currently trades at $76.9 per share.
The author has no position in any of the stocks mentioned in this report.
