On Monday, UBS reiterated its Neutral stance on Helen of Troy (NASDAQ:HELE), maintaining the $100.00 price target for the company's shares. The firm's analysis ahead of Helen of Troy's expected earnings report for the first quarter of fiscal year 2025, which is due on Tuesday, July 9, before the market opens, anticipates an earnings per share (EPS) of $1.59. This figure is just a cent below the Street's expectations.
The company's performance has been less robust compared to its small to mid-cap household and personal care (SMid-Cap HPC) peers year-to-date, with Helen of Troy's shares falling by 23.6% versus a 9.4% decline in its peer group. Following the release of fourth-quarter results and a fiscal year 2025 guidance that didn't meet expectations, the company's shares have seen a slight rebound, both absolutely and relatively, by 1.6%.
Investor sentiment towards Helen of Troy is reportedly mixed to negative, influenced by persistent worries about consumer demand. Despite questions about whether the risk/reward ratio for Helen of Troy is becoming more appealing, given its trading at approximately 10 times the next twelve months' estimated earnings versus a five-year historical average of around 15 times, UBS suggests that the guidance, which assumes an improvement in both top and bottom line growth after what is projected to be a challenging first quarter, is keeping bearish investors active.
UBS notes that while much of the downside may already be reflected in the current stock price, finding a catalyst that could significantly uplift investor sentiment remains challenging. The firm points out that there is still limited visibility on the potential improvement in top and bottom line growth for Helen of Troy.
In other recent news, Helen of Troy Limited reported a strong fourth quarter in its recent earnings call, with consolidated net sales increasing by 1% and a notable 21.9% rise in adjusted diluted EPS to $2.45. The company's strategic initiatives, such as the Elevate for Growth plan and Project Pegasus, have driven a gross profit margin expansion and a reduction in total debt. These developments highlight Helen of Troy's focus on growth and innovation despite macroeconomic challenges.
Fiscal year 2025 projections include net sales ranging from a 2% decline to 1% growth, with Home & Outdoor segment predicted to grow by 1% to 4% and the Beauty & Wellness segment expected to decline by 4.5% to 1.5%. The company's GAAP diluted EPS is projected at $6.68 to $7.45, and non-GAAP adjusted diluted EPS at $8.70 to $9.20.
Despite some challenges, such as a 2.5% decline in Beauty & Wellness segment net sales and integration issues with Curlsmith and DTC platform upgrades, the company remains optimistic about its future. These recent developments emphasize Helen of Troy's commitment to strategic investments, potential acquisitions, and its diversified brand portfolio.
InvestingPro Insights
As Helen of Troy (NASDAQ:HELE) approaches its first-quarter earnings report, the InvestingPro data provides a deeper look into the company's financial standing. With a market capitalization of $2.03 billion and a P/E ratio of 12.62, Helen of Troy appears to be trading at a low price-earnings ratio relative to near-term earnings growth, suggesting potential value for investors. The company's revenue for the last twelve months as of Q4 2024 stood at $2.005 billion, with a notable gross profit margin of 47.31%, indicating a strong ability to control costs and generate earnings.
Despite recent declines, with the stock having lost 23.23% year-to-date and trading near its 52-week low, InvestingPro Tips highlight that the stock’s RSI suggests it is in oversold territory, which could interest value-seeking investors. Moreover, the company's liquid assets exceed its short-term obligations, providing financial stability.
For those considering an investment in Helen of Troy, the InvestingPro platform offers additional insights, including a total of 11 InvestingPro Tips that can further inform investment decisions. Remember to use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes access to these valuable tips.
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