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Category: Stock Market and Helen of Troy
Date: 7 October 2019 Stock Price: $160 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Helen of Troy, a global consumer products company whose brands include Vicks and Braun.
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About Helen of Troy
Helen of Troy Limited (NASDAQ: HELE) is a leading global consumer products company offering creative solutions for its customers through a strong portfolio of well-recognized and widely-trusted brands, including OXO, Hydro Flask, Vicks, Braun, Honeywell, PUR, and Hot Tools. All trademarks herein belong to Helen of Troy Limited (or its affiliates) and/or are used under license from their respective licensors.
The image below shows the evolution of Helen of Troy from a beauty only company in the 1960's to the current state which includes Beauty, Health and Home and Housewares.
The image below shows the evolution of Helen of Troy from a beauty only company in the 1960's to the current state which includes Beauty, Health and Home and Housewares.
Overview of Helen of Troy's latest earnings report
- Total Revenues: $376.335 million (up from $354.679 million for the same quarter of the previous year)
- Total Revenues increased by 6.1% over the last 12 months
- Cost of sales: $222.608 million (up from $208.121 million for the same quarter of the previous year)
- Cost of sales increased by 6.9% over the last 12 months
- Net income: $40.694 million (up from $37.792 million for the same quarter of the previous year)
- Diluted earnings per share: $1.61 (up from $1.42 for the same quarter of the previous year)
- PE ratio: 24.8
- Diluted weighted-average shares outstanding: 25.245 million (down from 26.614 million for the same quarter of the previous year)
- Cash and cash equivalents: $18.375 million
- Cash and cash equivalents per share: $0.73
- Cash and cash equivalents makes up 0.45% of Helen of Troy's market capital
- Cash and cash equivalents makes up 1.07% of Helen of Troy's total assets
- Accounts receivable: $262.511 million
- Accounts receivable makes up 15.4% of Helen of Troy's total assets
- Cash generated from operations: $15.676 million
- Cash generated from operations per share: $0.62
- Stockholders equity of Helen of Troy: $1.036 billion
- Stockholders equity per share: $41.03
- So Helen of Troy is trading at 3.89 times its stockholders equity which is within the expected range of between 2 and 4 times that most firms tend to trade at.
Helen of Troy's management commentary on the results and business outlook
El Paso, Texas, July 9, 2019 — Helen of Troy Limited (NASDAQ: HELE), designer, developer and worldwide marketer of consumer brand-name housewares, health and home, and beauty products, today reported results for the three-month period ended May 31, 2019.
Julien R. Mininberg, Chief Executive Officer, stated: “This quarter marks a great start to fiscal 2020 and Phase II of our Transformation, which we recently unveiled during our Investor Day on May 21st . Consolidated core business sales grew 6.8% and adjusted diluted EPS grew 10.2%, both well ahead of our expectations given the especially high year-ago base. Continued investment behind our Leadership Brands paid off handsomely, with net sales growth of 7.4% in the quarter. We continue to gain significant ground online with strong double-digit growth to now represent 23% of consolidated sales. Housewares had a stellar quarter, and strong Beauty appliance sales drove growth in that segment. As expected, our Health & Home segment faced a tough comparison to the very strong first quarter of last fiscal year. As a result of the strong start, we are pleased to raise our revenue and EPS outlook for Fiscal 2020.” Mr. Mininberg continued: “We believe we have the right people, systems, and strategies in place to deliver on our Phase II goals over the next five years, powered by a flywheel of continued net sales and adjusted diluted EPS growth, further improvements to our shared services and operating capability, and a winning culture.”
Fiscal 2020 Annual Outlook For fiscal 2020, the Company has updated its outlook and now expects consolidated net sales revenue in the range of $1.590 to $1.620 billion, which implies consolidated sales growth of 1.7% to 3.6%, compared to the prior expectation of 1% to 3%. By segment, the outlook reflects:
• Housewares net sales growth of 6% to 8%, compared to the prior expectation of 4% to 6%;
• Health & Home net sales growth of 2% to 3%, which remains the same; and
• Beauty net sales decline in the low-single digits, which remains the same.
The Company now expects consolidated GAAP diluted EPS from continuing operations of $6.80 to $6.97, and non-GAAP adjusted diluted EPS from continuing operations in the range of $8.40 to $8.65, which excludes any asset impairment charges, restructuring charges, share-based compensation expense and intangible asset amortization expense. The Company’s net sales and EPS outlook assumes the severity of the upcoming cough/cold/flu season will be in line with historical averages.
The Company’s net sales and EPS outlook also assumes that June 2019 foreign currency exchange rates will remain constant for the remainder of the fiscal year. The Company now expects the year-over-year comparison of adjusted diluted EPS from continuing operations to be impacted by an expected increase in growth investments of 12% to 17% in fiscal 2020, compared to the prior expectation of 10% to 15%. The diluted EPS outlook is based on an estimated weighted average diluted shares outstanding of 25.3 million. The increase in the adjusted diluted EPS outlook for fiscal 2020 reflects the Company's strong performance in the first quarter, partially offset by the expected impact of the new U.K. Offshore Receipts in respect of Intangible Property ("ORIP") tax, the expected unfavorable impact from the assumption that June 2019 foreign exchange rates will remain constant for the rest of fiscal 2020, and an expected increase in growth investments compared to the Company's original outlook. Combined, these items have an impact of approximately $0.20 per diluted share.
The Company continues to expect adjusted EPS growth for fiscal 2020 to be concentrated in the second half of the year due to the strong performance comparison and specific events in the first half of fiscal 2019. The Company now expects growth in adjusted EPS for the first half of fiscal 2020 of 4% to 6% year-over-year. The Company now expects a reported GAAP effective tax rate range of 9.9% to 11.9%, and an adjusted effective tax rate range of 9.1% to 10.7% for the full fiscal year 2020. Please refer to the schedule entitled “Effective Tax Rate (GAAP) and Adjusted Effective Tax Rate (Non-GAAP)” in the accompanying tables to this press release. The likelihood and potential impact of any fiscal 2020 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations, further tariff increases, or further share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company’s sales and earnings outlook
Julien R. Mininberg, Chief Executive Officer, stated: “This quarter marks a great start to fiscal 2020 and Phase II of our Transformation, which we recently unveiled during our Investor Day on May 21st . Consolidated core business sales grew 6.8% and adjusted diluted EPS grew 10.2%, both well ahead of our expectations given the especially high year-ago base. Continued investment behind our Leadership Brands paid off handsomely, with net sales growth of 7.4% in the quarter. We continue to gain significant ground online with strong double-digit growth to now represent 23% of consolidated sales. Housewares had a stellar quarter, and strong Beauty appliance sales drove growth in that segment. As expected, our Health & Home segment faced a tough comparison to the very strong first quarter of last fiscal year. As a result of the strong start, we are pleased to raise our revenue and EPS outlook for Fiscal 2020.” Mr. Mininberg continued: “We believe we have the right people, systems, and strategies in place to deliver on our Phase II goals over the next five years, powered by a flywheel of continued net sales and adjusted diluted EPS growth, further improvements to our shared services and operating capability, and a winning culture.”
Fiscal 2020 Annual Outlook For fiscal 2020, the Company has updated its outlook and now expects consolidated net sales revenue in the range of $1.590 to $1.620 billion, which implies consolidated sales growth of 1.7% to 3.6%, compared to the prior expectation of 1% to 3%. By segment, the outlook reflects:
• Housewares net sales growth of 6% to 8%, compared to the prior expectation of 4% to 6%;
• Health & Home net sales growth of 2% to 3%, which remains the same; and
• Beauty net sales decline in the low-single digits, which remains the same.
The Company now expects consolidated GAAP diluted EPS from continuing operations of $6.80 to $6.97, and non-GAAP adjusted diluted EPS from continuing operations in the range of $8.40 to $8.65, which excludes any asset impairment charges, restructuring charges, share-based compensation expense and intangible asset amortization expense. The Company’s net sales and EPS outlook assumes the severity of the upcoming cough/cold/flu season will be in line with historical averages.
The Company’s net sales and EPS outlook also assumes that June 2019 foreign currency exchange rates will remain constant for the remainder of the fiscal year. The Company now expects the year-over-year comparison of adjusted diluted EPS from continuing operations to be impacted by an expected increase in growth investments of 12% to 17% in fiscal 2020, compared to the prior expectation of 10% to 15%. The diluted EPS outlook is based on an estimated weighted average diluted shares outstanding of 25.3 million. The increase in the adjusted diluted EPS outlook for fiscal 2020 reflects the Company's strong performance in the first quarter, partially offset by the expected impact of the new U.K. Offshore Receipts in respect of Intangible Property ("ORIP") tax, the expected unfavorable impact from the assumption that June 2019 foreign exchange rates will remain constant for the rest of fiscal 2020, and an expected increase in growth investments compared to the Company's original outlook. Combined, these items have an impact of approximately $0.20 per diluted share.
The Company continues to expect adjusted EPS growth for fiscal 2020 to be concentrated in the second half of the year due to the strong performance comparison and specific events in the first half of fiscal 2019. The Company now expects growth in adjusted EPS for the first half of fiscal 2020 of 4% to 6% year-over-year. The Company now expects a reported GAAP effective tax rate range of 9.9% to 11.9%, and an adjusted effective tax rate range of 9.1% to 10.7% for the full fiscal year 2020. Please refer to the schedule entitled “Effective Tax Rate (GAAP) and Adjusted Effective Tax Rate (Non-GAAP)” in the accompanying tables to this press release. The likelihood and potential impact of any fiscal 2020 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations, further tariff increases, or further share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company’s sales and earnings outlook
Helen of Troy (NASDAQ: HELE) stock price history
The image below, obtained from Google, shows the stock price history of Helen of Troy over the last 5 years. And it's been a very good time for Helen of Troy's stockholders.5 years ago the stock was trading at around $54 a stock and its currently trading at $160 a stock. That's a very strong return of 196% provided to Helen of Troy stockholders over the last 5 years. The stock of Helen of Troy is trading at a lot closer to its 52 week high of $160.73 than it is to its 52 week low of $108.30 which to us is a clear indication that the short term sentiment and momentum of Helen of Troy's stock is very positive at this point in time.
Recent coverage of Helen of Troy
The extract below discusses Domino's upcoming earnings release as obtained from TheStreet.com
Shares of personal and household products maker Helen of Troy (HELE - Get Report) surged more than 8% in premarket trading on Wednesday after the company reported fiscal first-quarter results that beat analysts' forecasts. The Hamilton, Bermuda-based company, which distributes brands that include Oxo, Braun and Honeywell, reported fiscal first-quarter net income of $40.7 million, or $1.61 a share, vs. $37.8 million, or $1.42 a share, in the comparable year-earlier period.
Adjusted for stock option expenses and amortization costs, earnings were $2.06 a share, well above the $1.69 a share expected by analysts polled by FactSet. Sales for the quarter were $376.3 million, also above analysts' expectations of $351.5 million.
Shares of personal and household products maker Helen of Troy (HELE - Get Report) surged more than 8% in premarket trading on Wednesday after the company reported fiscal first-quarter results that beat analysts' forecasts. The Hamilton, Bermuda-based company, which distributes brands that include Oxo, Braun and Honeywell, reported fiscal first-quarter net income of $40.7 million, or $1.61 a share, vs. $37.8 million, or $1.42 a share, in the comparable year-earlier period.
Adjusted for stock option expenses and amortization costs, earnings were $2.06 a share, well above the $1.69 a share expected by analysts polled by FactSet. Sales for the quarter were $376.3 million, also above analysts' expectations of $351.5 million.
Helen of Troy (NASDAQ: HELE) latest stock valuation
So what is Helen of Troy's stock worth based on the release of their latest earnings report? Based on the group's latest earnings and their outlook provided our valuation model provides a target (full value) price at $132.90 a Helen of Troy stock. We therefore believe that the stock is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $132.90. Thus we see a good entry point into Helen of Troy's stock at $119.60 or below. We believe that Helen of Troy's stock will pull back in coming weeks and months to levels closer to our target (full value) price, unless their 2nd quarter earnings release on 8 October 2019 surprises to the upside. If it doesn't we cannot see Helen of Troy's continuing to trade at its current valuation levels.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $132.90. Thus we see a good entry point into Helen of Troy's stock at $119.60 or below. We believe that Helen of Troy's stock will pull back in coming weeks and months to levels closer to our target (full value) price, unless their 2nd quarter earnings release on 8 October 2019 surprises to the upside. If it doesn't we cannot see Helen of Troy's continuing to trade at its current valuation levels.