Buy In on Stability at Edgewell Personal Care Stock

Tuesday, February 9, 2021 | Steve Anderson
Buy In on Stability at Edgewell Personal Care Stock

Admittedly, for some out there, their personal care regimens have slipped a peg or two in the face of the ongoing demands to stay at home. What point in beautifying the landscape that no one ever sees anyway? Yet despite this serious setback for most grooming platforms, Edgewell Personal Care (NYSE:EPC) managed to turn in an earnings report that will make investors reconsider staying out of such a market.

Edgewell Does Well in the Earnings Stakes

Edgewell—who represents an umbrella of major brands that includes Schick, Edge and Playtex among others—brought out earnings of $0.43 per share for the quarter, which compares marvelously against estimates from Zacks, which were looking for $0.22 per share. Sadly, both expectation and surprisingly-pleasant reality pale against the figures from this time last year, when Edgewell brought in earnings of $0.55 per share. This makes the third time in the last four quarters that Edgewell has beaten expectations on earnings.

Interestingly, revenue is an even closer match. The company posted revenue of $451.1 million for the quarter, which beats the Zacks estimates by 4.23%. It doesn't quite beat the revenue posted this time last year, however, but it's surprisingly close; revenue last year came in at $454 million. That puts Edgewell's revenue at $2.9 million short of last year, which is a percentage that can't even be expressed in whole numbers.

Good News, But Not Quite Good Enough for Analysts

While this is all definitely good news for Edgewell, the analyst consensus—as revealed by our latest research—has a bit more restrained look at Edgewell's near-term future. The company is currently rated a “hold”, as it has been for the last six months. In fact, consensus on the stock is trending increasingly bearish.

Six months ago, the company had one “sell” rating, five “hold”, three “buy” and one “strong buy” to its credit. Three months ago, that shifted to one “sell”, four “hold”, three “buy” and one “strong buy.” A month ago, a new “sell” rating was added, bringing the total to two “sell”, four “hold”, three “buy” and one “strong buy,” which is exactly where we are today.

The price target, meanwhile, has plateaued at $39, where it's been for the last month. It's up from the price target seen three months ago, at $38.88, which in turn is up from the target six months ago of $38.63. With share prices currently running at $35.36 as of this writing, though, it's clear that there's still some upside potential to this stock.

Stability Above All?

Taking a look at the company's overall position, we have an eye-catching picture that starts to emerge. The biggest point here is sheer stability; the last time any analyst changed position on Edgewell was back on December 7, just over two months ago, when Wells Fargo started covering the stock. Before that, you had to go all the way back to November 23 to see any conventional movement as Deutsche Bank hiked its price target from $34 to $40. When the analysts don't move very far in any one direction for a period of months, that suggests stability.

Better yet, the company has a diversified product line, from garments to grooming, which allows it to better maintain a position despite what the larger economy is doing. You can actually see as much looking at the company's 2020 stock figures; the company traded between $40 and $20 a share for the entirety of that whole twisted year. After the initial fireworks of the huge late March / early April sell off died down, the company actually managed to hold a price around the $30 range.

Given that the company paid a $0.15 per share dividend back on January 6, reports note, “stability” is the kind of thing that income investors will generally look for, and Edgewell seems to have that in spades. It held a pretty close position through most of 2020, easily one of the most volatile years stock prices have ever seen.

The real value of Edgewell stock doesn't seem to be in explosive potential growth, or even in potentially huge new dividend declarations. The real value of Edgewell seems to be in the fact that it can hold a line regardless of market conditions, as demonstrated by the fact that it didn't fluctuate all that much, even in the worst of pandemic lockdowns. For those looking to add that kind of stability to their portfolios, this “hold” might actually prove to be a better “buy” instead.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Edgewell Personal Care (EPC)1.8$38.74+0.1%1.55%31.24Hold$35.20
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