ENR

Energizer Holdings($ENR) Insiders Deploy $370,000 in Cluster Buying After 45% Stock Plunge

05/19/2025 22:18

Amid a sharp decline in Energizer Holdings Inc ($ENR) stock following its early May earnings report, company directors and senior executives have stepped in with substantial share purchases last week. This pattern of insider buying could signal that insiders believe the stock is undervalued, catching investors' attention. Energizer's share price, which started the year in the $34 range and gradually declined to the $27 level by late April, plummeted further after the company's Q1 2025 earnings release on May 6, reaching as low as $21.56. This represents a decline of approximately 45% from its 52-week high of $39.01. These significant drops were immediately followed by concentrated insider purchases. On May 12, Energizer Holdings director Patrick Moore acquired 10,000 shares at $23.10 per share, totaling $231,000. On the same day, fellow director Kevin Hunt purchased 5,000 shares at $22.85 per share, investing $114,250. Just days later, on May 16, Executive Vice President John Drabik added 1,000 shares at $23.86 per share, amounting to $23,860. Together, these three insiders bought 16,000 shares worth approximately $370,000 within a week, displaying a classic 'cluster buying' pattern. This contrasts sharply with insider activity in late 2024, when then-EVP Robin Vauth sold a total of 6,048 shares in two transactions, and officer Sara B Hampton divested 2,812 shares. Those sales occurred when the stock was trading in the $35-38 range, significantly higher than current levels. Director Patrick Moore's purchase is particularly noteworthy as it more than doubled his holdings. Moore serves as Energizer's Independent Chairman and brings substantial retail industry experience, having previously served as CEO of Payless ShoeSource and CFO of Kmart Corporation. These insider transactions should be considered alongside Energizer's recent financial performance. On May 6, the company reported its Q1 2025 results (period ended March 31, 2025), posting adjusted earnings per share of $0.67, down from $0.72 in the same period last year, and revenue of $662.9 million, a 0.1% year-over-year decrease. These results slightly missed analyst expectations of $669.58 million in revenue. By segment, the core Batteries & Lights division grew 1.5% to $488 million, while the Auto Care segment declined 4.1% to $174.9 million. This mixed performance largely contributed to the stock's decline. However, it's worth noting that Energizer announced the completion of its acquisition of Advanced Power Solutions NV on May 2. This acquisition is expected to strengthen the company's battery product lineup and enhance market competitiveness. Combined with the aggressive insider buying, this acquisition suggests management confidence in the company's long-term growth prospects. Indeed, JP Morgan upgraded Energizer from 'underweight' to 'neutral' following the earnings report and significantly raised its price target from $32 to $39. JP Morgan analysts noted that Energizer is "set to have more consistent top line and bottom line" growth, adding that "ENR's top line is fueled by products volume growth and reinvestment of savings into advertising and promotions." Consumer sector analysts note that Energizer maintains solid brand power in the battery market, where it competes with Duracell (owned by Berkshire Hathaway) and Rayovac (acquired from Spectrum Brands). However, pressure from private labels and low-cost competitors, as well as consumer transition to rechargeable batteries, continues to constrain the company's growth. Examining Energizer's financial health reveals an extremely high debt-to-equity ratio of 2,431.52%. This substantial debt burden primarily stems from the company's acquisitions of Spectrum Brands' battery business in 2018 and its Auto Care business in 2019. Despite this significant leverage, the company maintains an annual dividend of $1.20 (yield of approximately 5.02%), potentially remaining attractive to income-focused investors. From a growth perspective, Energizer's revenue is projected to increase at an average annual rate of 1.5% over the next three years, below the 3.2% expected growth rate for the U.S. Household Products industry. This relatively modest growth outlook may continue to weigh on the stock's valuation. In conclusion, the aggressive buying by Energizer Holdings insiders following the stock's sharp decline could indicate they believe the shares are undervalued. However, investors should also consider the company's high debt ratio, relatively limited growth prospects, and competitive challenges in the battery industry. Particularly important will be monitoring how the recent acquisition and insider confidence might enhance the company's long-term value proposition.

You can receive notifications when news is published.