Send me real-time posts from this site at my email
Motley Fool

Why EnerSys Stock Dropped 11% on Thursday

What happened

Shares of Reading, Pennsylvania-based EnerSys (NYSE: ENS) closed the day down 10.8%, one day after the battery manufacturer reported fiscal Q3 2019 earnings that fell short of expectations.

Analysts had predicted that EnerSys would earn $1.25 per share on sales of $685.8 million in the quarter. Instead, EnerSys reported earnings of only $1.17 per share, pro forma, on sales of just $680 million.

Don't look now, but EnerSys stock just short-circuited. Image source: Getty Images.

So what

Actual GAAP earnings for the quarter were only $1.12 per share, which sounds bad, but was significantly better than the $0.61 per share that EnerSys lost in Q3 of fiscal 2018, a year ago, as a consequence of tax reform. Also, while sales missed estimates, they did grow 3% year over year.

CEO David Shaffer blamed a combination of weak sales to telecom customers who are hoarding cash to pay for "5G network upgrades" currently and "higher than projected freight costs in the quarter."

Now what

Looking forward, Shaffer predicted that sales of "DC power products" to telecom customers will pick up later this year. However, the CEO's guidance for pro forma profits of between $1.41 and $1.45 per share in fiscal Q4 (currently underway) nonetheless fell short of consensus analyst predictions for $1.50 per share in pro forma profit.

In other words, not only did EnerSys miss estimates in Q3 but it's planning to miss estimates again in Q4. No wonder investors are selling.

10 stocks we like better than EnerSys
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and EnerSys wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of January 31, 2019

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Popular posts

Welcome!!! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue