Personal care company Edgewell Personal Care (NYSE:EPC) met Wall Street’s revenue expectations in Q4 CY2024, but sales fell by 2.1% year on year to $478.4 million. Its non-GAAP profit of $0.07 per share was 41.5% below analysts’ consensus estimates.
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Edgewell Personal Care (EPC) Q4 CY2024 Highlights:
- Revenue: $478.4 million vs analyst estimates of $480 million (2.1% year-on-year decline, in line)
- Adjusted EPS: $0.07 vs analyst expectations of $0.12 (41.5% miss)
- Adjusted EBITDA: $45.9 million vs analyst estimates of $46.9 million (9.6% margin, 2.1% miss)
- Management reiterated its full-year Adjusted EPS guidance of $3.25 at the midpoint
- EBITDA guidance for the full year is $362 million at the midpoint, in line with analyst expectations
- Operating Margin: 4.2%, down from 5.3% in the same quarter last year
- Free Cash Flow was -$132.4 million compared to -$79.4 million in the same quarter last year
- Organic Revenue fell 1.3% year on year (3.1% in the same quarter last year)
- Market Capitalization: $1.54 billion
Company Overview
Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Personal Care
While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $2.24 billion in revenue over the past 12 months, Edgewell Personal Care is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage.
As you can see below, Edgewell Personal Care’s sales grew at a sluggish 2.2% compounded annual growth rate over the last three years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.
This quarter, Edgewell Personal Care reported a rather uninspiring 2.1% year-on-year revenue decline to $478.4 million of revenue, in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 2% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and suggests its newer products will not accelerate its top-line performance yet.
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Organic Revenue Growth
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 Edgewell Personal Care’s products has been stable over the last eight quarters but fell behind the broader sector. On average, the company has posted feeble year-on-year organic revenue growth of 2.5%. 
In the latest quarter, Edgewell Personal Care’s organic sales fell by 1.3% year on year. This decline was a reversal from its historical levels. We’ll keep a close eye on the company to see if this turns into a longer-term trend.
Key Takeaways from Edgewell Personal Care’s Q4 Results
It was encouraging to see Edgewell Personal Care beat analysts’ organic revenue expectations this quarter. We were also happy its gross margin narrowly outperformed Wall Street’s estimates. The company also reiterated its previously-provided EPS guidance, showing that it remains on track. The stock traded up 7.7% to $34.01 immediately following the results.
Big picture, is Edgewell Personal Care a buy here and 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.