Edgewell Personal Care (EPC)

Personal care company Edgewell Personal Care (NYSE:EPC) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 3.2% year on year to $627.2 million. Its non-GAAP profit of $0.92 per share was 7.5% 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).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $2.20 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 $2.20 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 missed Wall Street’s estimates and reported a rather uninspiring 3.2% year-on-year revenue decline, generating $627.2 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 4.2% over the next 12 months. Although this projection suggests its newer products will spur better top-line performance, it is still below average for the sector.

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 fell by 4.2% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.

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 42.8% gross margin over the last two years. That means for every $100 in revenue, only $57.24 went towards paying for raw materials, production of goods, transportation, and distribution.

In Q2, Edgewell Personal Care produced a 42.8% gross profit margin, down 1.9 percentage points year on year and missing analysts’ estimates by 2%. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Edgewell Personal Care has done a decent job managing its cost base over the last two years. The company has produced an average operating margin of 8.6%, higher than the broader consumer staples sector.

Looking at the trend in its profitability, Edgewell Personal Care’s operating margin decreased by 3.2 percentage points over the last year. Even though its historical margin was healthy, shareholders will want to see Edgewell Personal Care become more profitable in the future.

This quarter, Edgewell Personal Care generated an operating margin profit margin of 8.6%, down 4.2 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.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

In Q2, Edgewell Personal Care reported adjusted EPS at $0.92, down from $1.22 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 $2.58 to grow 24.4%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Edgewell Personal Care has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.6%, subpar for a consumer staples business.

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 6.4%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Edgewell Personal Care reported $199.6 million of cash and $1.40 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 $321 million of EBITDA over the last 12 months, we view Edgewell Personal Care’s 3.7× net-debt-to-EBITDA ratio as safe. We also see its $56.48 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.

We struggled to find many positives in these results. Its revenue missed and its organic revenue fell short of Wall Street’s estimates. Overall, this quarter was mediocre. The stock traded down 8.6% to $22.87 immediately after reporting.

Updated: November 8, 2025 at 9:40 PM EST

Before investing in or passing on Edgewell Personal Care, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

We see the value of companies helping consumers, but in the case of Edgewell Personal Care, we’re out. First off, its revenue growth was weak over the last three years. And while its gross margins indicate a healthy starting point for the overall profitability of the business, the downside is its cash profitability fell over the last year. On top of that, its declining EPS over the last three years makes it a less attractive asset to the public markets.

Edgewell Personal Care’s P/E ratio based on the next 12 months is 6.4x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $25.57 on the company (compared to the current share price of $18.73).

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.