Energizer currently trades at $29.22 per share and has shown little upside over the past six months, posting a small loss of 1%. The stock also fell short of the S&P 500’s 17.7% gain during that period.
Is now the time to buy Energizer, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Energizer Not Exciting?
We're swiping left on Energizer for now. Here are three reasons why ENR doesn't excite us and a stock we'd rather own.
1. Core Business Falling Behind as Organic Growth Slumps
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 Energizer’s products has barely risen over the last eight quarters. On average, the company’s organic sales have been flat. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Energizer’s revenue to rise by 3.4%. While this projection suggests its newer products will fuel better top-line performance, it is still below the sector average.
3. Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Energizer’s margin dropped by 3.9 percentage points over the last year. If its declines continue, it could signal increasing investment needs and capital intensity. Energizer’s free cash flow margin for the trailing 12 months was 5.4%.
Final Judgment
Energizer isn’t a terrible business, but it doesn’t pass our bar. With its shares trailing the market in recent months, the stock trades at 8.4× forward P/E (or $29.22 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are superior stocks to buy right now. We’d recommend looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.
Stocks We Would Buy Instead of Energizer
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