EnerSys (NYSE:ENS) Reports Sales Below Analyst Estimates In Q4 Earnings
Battery manufacturer EnerSys (NYSE:ENS) missed Wall Street’s revenue expectations in Q4 CY2024, but sales rose 5.2% year on year to $906.2 million. Next quarter’s revenue guidance of $980 million underwhelmed, coming in 4% below analysts’ estimates. Its non-GAAP profit of $3.12 per share was 8.8% above analysts’ consensus estimates.
Is now the time to buy EnerSys? Find out in our full research report.
Revenue: $906.2 million vs analyst estimates of $932.6 million (5.2% year-on-year growth, 2.8% miss)
Adjusted EPS: $3.12 vs analyst estimates of $2.87 (8.8% beat)
Adjusted EBITDA: $171.4 million vs analyst estimates of $158 million (18.9% margin, 8.5% beat)
Revenue Guidance for Q1 CY2025 is $980 million at the midpoint, below analyst estimates of $1.02 billion
Management raised its full-year Adjusted EPS guidance to $10.02 at the midpoint, a 12.6% increase
Operating Margin: 15.7%, up from 10.7% in the same quarter last year
Free Cash Flow Margin: 6.3%, down from 12.9% in the same quarter last year
Sales Volumes rose 2% year on year (-7% in the same quarter last year)
Market Capitalization: $3.74 billion
Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE:ENS) manufactures various kinds of batteries for a range of industries.
Renewable energy companies are buoyed by the secular trend of green energy that is upending traditional power generation. Those who innovate and evolve with this dynamic market can win share while those who continue to rely on legacy technologies can see diminishing demand, which includes headwinds from increasing regulation against “dirty” energy. Additionally, these companies are at the whim of economic cycles, as interest rates can impact the willingness to invest in renewable energy projects.
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, EnerSys grew its sales at a sluggish 2.8% compounded annual growth rate. This was below our standards and is a poor baseline for our analysis.
EnerSys Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. EnerSys’s recent history shows its demand slowed as its revenue was flat over the last two years.
EnerSys Year-On-Year Revenue Growth
We can better understand the company’s revenue dynamics by analyzing its units sold. Over the last two years, EnerSys’s units sold averaged 3.3% year-on-year declines. Because this number is lower than its revenue growth, we can see the company benefited from price increases.
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EnerSys Units Sold
This quarter, EnerSys’s revenue grew by 5.2% year on year to $906.2 million, missing Wall Street’s estimates. Company management is currently guiding for a 7.6% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 7.7% over the next 12 months, an improvement versus the last two years. This projection is above average for the sector and indicates its newer products and services will catalyze better top-line performance.
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EnerSys has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 8.2%, higher than the broader industrials sector.
Looking at the trend in its profitability, EnerSys’s operating margin rose by 5.4 percentage points over the last five years, showing its efficiency has meaningfully improved.
EnerSys Trailing 12-Month Operating Margin (GAAP)
In Q4, EnerSys generated an operating profit margin of 15.7%, up 5 percentage points year on year. The increase was encouraging, and since its operating margin rose more than its gross margin, we can infer it was recently more efficient with expenses such as marketing, R&D, and administrative overhead.
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
EnerSys’s EPS grew at a remarkable 13.2% compounded annual growth rate over the last five years, higher than its 2.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
EnerSys Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into EnerSys’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, EnerSys’s operating margin expanded by 5.4 percentage points over the last five years. On top of that, its share count shrank by 6.8%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.
EnerSys Diluted Shares Outstanding
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For EnerSys, its two-year annual EPS growth of 40.3% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q4, EnerSys reported EPS at $3.12, up from $2.56 in the same quarter last year. This print beat analysts’ estimates by 8.8%. Over the next 12 months, Wall Street expects EnerSys’s full-year EPS of $9.29 to grow 2.6%.
We were impressed by EnerSys’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue missed and its sales volume fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $94.75 immediately after reporting.
EnerSys may have had a tough quarter, but does that actually create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
