Spectrum Brands Holdings surprised the Street with better-than-expected 4Q sales and earnings results. The branded consumer products company cited improved demand and a strong recovery from COVID-related supply disruptions as the driving force behind the upbeat results. Shares rose 3.23% on Friday.
Spectrum Brands’ (SPB) 4Q earnings jumped 52.2% year-over-year to $1.72 per share, and surpassed the analysts’ expectations of $1.30 per share. Its sales increased 17.9% to $1.17 billion in the fourth quarter, topping the consensus estimates of $1.03 billion and reflecting strong growth across all of its units.
Spectrum Brands’ David Maura said that the “top line results reflect elevated demand levels, with strong POS [point-of-sales] and improved output.” He added, “This is evidence of our quick recovery from COVID-19 related supply disruptions earlier in the year. Additionally, our incremental marketing and advertising investments are paying dividends by driving stronger organic top line growth.”
As for fiscal 2021, the company expects sales to grow in the range of 3% to 5%, above the consensus estimate of a 0.1% decline. The company also expects adjusted EBITDA to increase in the mid-single-digit range. (See SPB stock analysis on TipRanks).
Following the 3Q results, Oppenheimer analyst Ian Zaffino raised his price target to $80 (22% upside potential) from $68 and maintained a Buy rating on the stock. The analyst said the company’s “products and portfolio are ideally suited for the current trends of repair/remodel, DIY [do-it-yourself] gardening and pet ownership. COVID headwinds have largely subsided and FY21 is off to a solid start.”
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 2 Buys and 1 Hold. The average price target stands at $74.67 and implies upside potential of about 13.9% to current levels. Shares are up by 1.99% year-to-date.
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