Edgewell Personal Care (NYSE:EPC) Surprises With Q1 Sales

Petr Huřťák /
2024/02/07 6:06 am EST

Personal care company Edgewell Personal Care (NYSE:EPC) reported Q1 FY2024 results beating Wall Street analysts' expectations, with revenue up 4.2% year on year to $488.9 million. It made a non-GAAP profit of $0.24 per share, down from its profit of $0.31 per share in the same quarter last year.

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Edgewell Personal Care (EPC) Q1 FY2024 Highlights:

  • Revenue: $488.9 million vs analyst estimates of $481.4 million (1.6% beat)
  • EPS (non-GAAP): $0.24 vs analyst estimates of $0.06 ($0.18 beat)
  • Guidance for full year 2024 EPS (non-GAAP): $2.70 vs analyst estimates of $2.74 (1.5% miss)
  • Free Cash Flow was -$79.4 million, down from $29.4 million in the previous quarter
  • Gross Margin (GAAP): 40.4%, in line with the same quarter last year
  • Organic Revenue was up 3.1% year on year (beat vs. expectations of up 2.3% year on year)
  • Market Capitalization: $1.88 billion

"We had a good start to the fiscal year, with 3% organic net sales growth, and notably strong performance across our international markets, reflective of underlying volume growth and further price execution. Gross margin was a highlight and above our expectations, driven by our ability to realize further productivity savings and gains from improved revenue management. With this good start and strong fundamentals in place, we are on track to meet our previous outlook for both top and bottom line." said Rod Little, Edgewell's President and Chief Executive Officer.

Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.

Personal Care

Personal care products include lotions, fragrances, shampoos, cosmetics, and nutritional supplements, among others. While these products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. As with other consumer staples categories, personal care brands must exude quality and be priced optimally given the crowded competitive landscape. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.

Sales Growth

Edgewell Personal Care carries some recognizable brands and products but is a mid-sized consumer staples company. Its size could bring disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the other hand, Edgewell Personal Care can still achieve high growth rates because its revenue base is not yet monstrous.

As you can see below, the company's annualized revenue growth rate of 5.3% over the last three years was weak for a consumer staples business.

Edgewell Personal Care Total Revenue

This quarter, Edgewell Personal Care reported decent year-on-year revenue growth of 4.2%, and its $488.9 million in revenue topped Wall Street's estimates by 1.6%. Looking ahead, Wall Street expects sales to grow 1.9% over the next 12 months, a deceleration from this quarter.

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Key Takeaways from Edgewell Personal Care's Q1 Results

The quarter was solid, with organic revenue growth beating, leading to a total revenue beat. Gross margin and EPS also outperformed. However, full year EPS guidance was below expectations. It was a mixed quarter, with good actual results but a weaker-than-expected outlook. The stock is flat after reporting and currently trades at $37.39 per share.

So should you invest in Edgewell Personal Care right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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