EnerSys Upgraded to Strong Buy - Analyst Blog

On Jun 10, Zacks Investment Research upgraded EnerSys ENS to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

EnerSys has been witnessing rising earnings estimates on the back of strong fiscal fourth-quarter 2014 results. Moreover, this leading stored energy solutions provider delivered positive earnings surprises in all of the last 4 quarters with an average beat of 4.6%. The long-term expected earnings growth rate for this stock is 13.0%   

EnerSysreported fiscal fourth-quarter (ended Mar 31, 2014) results on May 28. Non-GAAP earnings per share came in at $1.18, surpassing the Zacks Consensus Estimate of $1.10 by 7.3%. The earnings were ahead of the company's previously projected range of $1.08 to $1.12 per share. The company's adjusted earnings for fiscal 2014 came in at $3.96 per share compared with the prior-year figure of $3.55 per share. The company's earnings per share nearly tripled over the last four years.

Earnings were primarily aided by solid top-line growth of 16% and significant activity in Americas and Asia. The company closed 3 critical acquisitions in fiscal 2014, which are expected to contribute nearly $200 million to revenues in fiscal 2015. Moreover, the company's business in EMEA performed well with operating earnings of 12.4% surpassing the expected 10.0% earnings. Recently, the company announced its decision to increase the quarterly dividend by 40% to 17.5 cents per share. Management has also approved a $70 million share repurchase program in its efforts to enhance shareholders' wealth.

The company has projected its earnings per share for first-quarter fiscal 2015 to be in the range of $1.02 – $1.06 excluding the anticipated restructuring and related expenses amounting to 7 cents per share.

The Zacks Consensus Estimate for first-quarter fiscal 2015 has increased nearly 1.0% to $1.05 over the last 30 days driven by the positive estimate revisions. The current estimate is towards the higher end of the guided range. The Zacks Consensus Estimate for fiscal 2015 also surged 5.2% to $4.48 per share as 1 of the 2 estimates was revised higher over the last 30 days.

Other Stocks to Consider

Some other stocks in the same sector that can be considered include AO Smith Corp. AOS, Quanta Services, Inc. PWR and ESCO Technologies Inc. ESE. All these stocks carry a Zacks Rank #2 (Buy).