Prestige Brands Holdings Beats Q4 Earnings, Misses Revs - Analyst Blog

Prestige Brands Holdings, Inc.'s PBH shares were down 0.6% immediately after the company reported fourth quarter fiscal 2014 earnings. However, shares gained 0.8% in the following trading session.

The company's fourth quarter fiscal 2014 earnings of 35 cents per share, were a penny above the Zacks Consensus Estimate but a penny short of the year-ago earnings.

Fourth quarter revenues were $144.3 million, down 6.6% from the year-ago quarter. The decrease was primarily due to the impact of retailer inventory adjustments which was moderated in the quarter. Revenues missed the Zacks Consensus Estimate of $147 million.

In fiscal 2014, Prestige Brands reported earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.51 per share and the year-ago earnings of $1.50 per share.

Revenues were $601.9 million in fiscal 2014, down 3.5% year over year reflecting retailer dynamics, competitive brand returns and the lower cough/cold incidence level. Revenues missed the Zacks Consensus Estimate of $604 million.

The Quarter in Detail

In the reported quarter, the Over-the-Counter (OTC) Healthcare segment generated revenues of $122.7 million, down 8.3% from the year-ago quarter. This decline reflects lower cough/cold incidence levels, entry of competitive products and changes in retailer inventory levels.

Revenues generated by the Household Cleaning segment were $21.5 million, up 3.9% year over year.

General and administrative (G&A) expenses increased 15.3% year over year to $13.1 million.

Fiscal 2015 Guidance

Prestige Brands expects fiscal 2015 adjusted earnings per share in the range of $1.75 to $1.85. The Zacks Consensus estimate of $1.82 is within the company's guidance range. The company expects revenues to grow in the range of 15%−18%.

This growth will reflect the recent Hydralyte acquisition, the upcoming Insight acquisition and higher investment in its core brands. Although revenues are expected to remain flat or decrease 3% year over year in the first half of fiscal 2015, due to strong competition in the retail environment and tough year-over-year comparisons, the company expects revenues to increase nearly 30% in the second half of fiscal 2015, primarily due to the impact of the upcoming Insight acquisition and organic growth.

Free cash flow generation is expected to be $150 million in fiscal 2015.  

Prestige Brands carries a Zacks Rank #1 (Strong Buy). Some stocks looking equally good in the health care sector include Summer Infant, Inc. SUMR, Vapor Corp. (VPCO) and Nutrisystem, Inc. NTRI. While Summer Infant carries a Zacks Rank #1, Vapor Corp. and Nutrisystem hold a Zacks Rank #2 (Buy).

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