Spectrum Brands (SPB) Stock Trades Up, Here Is Why

Jabin Bastian /
2024/02/08 12:00 pm EST

What Happened:

Shares of household products company Spectrum Brands (NYSE:SPB) jumped 9.1% in the morning session after the company reported first-quarter results that beat on all key line items such as revenue, adjusted EBITDA, operating income, and EPS. While a raise of full-year guidance would have been icing on the cake, the company's maintenance of its previous outlook shows that Spectrum Brands is staying on track. Zooming out, this was a very solid quarter that should have shareholders pleased.

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What is the market telling us:

Spectrum Brands's shares are somewhat volatile and over the last year have had 3 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 7.9% on the news that the company reported third quarter results and provided revenue guidance for the next year, which missed Wall Street's expectations. Revenue was narrowly above expectations during the quarter and declined in absolute terms, driven by "slower category POS and planned exit of Non-strategic categories." The company also provided weak guidance on the near-term demand environment, adding, "We believe the overall macro-economic environment will continue to deteriorate and result in top-line pressure, particularly in our Home and Personal Care business." On the other hand, Spectrum Brands blew past analysts' Adjusted EBITDA and EPS expectations this quarter. That stood out as a positive in these results. Overall, this was a weaker quarter for Spectrum Brands, with an underwhelming near-term sales outlook.

Spectrum Brands is up 8.5% since the beginning of the year. Investors who bought $1,000 worth of Spectrum Brands's shares 5 years ago would now be looking at an investment worth $1,855.

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