Edgewell Personal Care (EPC)

Personal care company Edgewell Personal Care (NYSE:EPC) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 3.8% year on year to $537.2 million. Its non-GAAP profit of $0.68 per share was 15.6% below analysts’ consensus estimates.

Company Overview

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.

While personal care products 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. 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.

Competitors in the personal care market include Proctor & Gamble (NYSE:PG), Unilever (LSE:ULVR), and Kimberly-Clark (NYSE:KMB).

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $2.22 billion in revenue over the past 12 months, Edgewell Personal Care is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, Edgewell Personal Care struggled to increase demand as its $2.22 billion of sales for the trailing 12 months was close to its revenue three years ago. This shows demand was soft, a rough starting point for our analysis.

This quarter, Edgewell Personal Care reported modest year-on-year revenue growth of 3.8% but beat Wall Street’s estimates by 0.6%.

Looking ahead, sell-side analysts expect revenue to grow 1.7% over the next 12 months, similar to its three-year rate. This projection is underwhelming and indicates its newer products will not accelerate its top-line performance yet.

When analyzing revenue growth, we care most about organic revenue growth. This metric captures a business’s performance excluding one-time events such as mergers, acquisitions, and divestitures as well as foreign currency fluctuations.

The demand for Edgewell Personal Care’s products has barely risen over the last eight quarters. On average, the company’s organic sales have been flat.

In the latest quarter, Edgewell Personal Care’s organic sales rose by 2.5% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.

Edgewell Personal Care has great unit economics for a consumer staples company, giving it ample room to invest in areas such as marketing and talent to grow its brand. As you can see below, it averaged an excellent 42.4% gross margin over the last two years. That means Edgewell Personal Care only paid its suppliers $57.62 for every $100 in revenue.

This quarter, Edgewell Personal Care’s gross profit margin was 38.8%, down 3.7 percentage points year on year. Edgewell Personal Care’s full-year margin has also been trending down over the past 12 months, decreasing by 1.4 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Edgewell Personal Care was profitable over the last two years but held back by its large cost base. Its average operating margin of 6.6% was weak for a consumer staples business. This result is surprising given its high gross margin as a starting point.

Analyzing the trend in its profitability, Edgewell Personal Care’s operating margin decreased by 4.5 percentage points over the last year. Edgewell Personal Care’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Edgewell Personal Care generated an operating margin profit margin of negative 6.8%, down 10.7 percentage points year on year. Since Edgewell Personal Care’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Edgewell Personal Care reported adjusted EPS of $0.68, down from $0.72 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Edgewell Personal Care’s full-year EPS of $2.54 to grow 6.9%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Edgewell Personal Care has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 4.8%, subpar for a consumer staples business.

Taking a step back, we can see that Edgewell Personal Care’s margin dropped by 5.9 percentage points over the last year. This along with its unexciting margin put the company in a tough spot, and shareholders are likely hoping it can reverse course. If the trend continues, it could signal it’s becoming a more capital-intensive business.

Edgewell Personal Care’s free cash flow clocked in at $46.5 million in Q3, equivalent to a 8.7% margin. This cash profitability was in line with the comparable period last year and above its two-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Edgewell Personal Care historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.9%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Edgewell Personal Care reported $225.7 million of cash and $1.41 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $303.8 million of EBITDA over the last 12 months, we view Edgewell Personal Care’s 3.9× net-debt-to-EBITDA ratio as safe. We also see its $43.6 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Edgewell Personal Care narrowly top analysts’ organic revenue expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its EBITDA missed and its gross margin fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $19.01 immediately following the results.

Updated: December 4, 2025 at 9:51 PM EST

Are you wondering whether to buy Edgewell Personal Care or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

We cheer for all companies serving everyday consumers, but in the case of Edgewell Personal Care, we’ll be cheering from the sidelines. First off, its revenue growth was weak over the last three years, and analysts don’t see anything changing over the next 12 months. And while its gross margins indicate a healthy starting point for the overall profitability of the business, the downside is its projected EPS for the next year is lacking. On top of that, its cash profitability fell over the last year.

Edgewell Personal Care’s P/E ratio based on the next 12 months is 7.4x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $23.86 on the company (compared to the current share price of $16.92).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.