Update: Prestige Brands Holdings' Earnings

Aug.18.14 | About: Prestige Brands (PBH)

Summary

Prestige Brands Holdings beat earnings and revenue estimates in FQ1.

I’m moving to the sidelines until the acquisition of Insight Pharmaceuticals is complete. Shares are up 30% since I first recommended them.

Based on guidance, Prestige Brands will likely not post EPS and FCF as strong as I had anticipated.

Prestige Brands Holdings (NYSE:PBH) reported FQ1 EPS of $0.41, which beat estimates by one cent. Revenues grew just 1.9% y/y, but beat estimates by $2.5 million. The fastest growing segment for Prestige Brands was the household cleaning segment. Its revenues increased 7.7% to $21.5 million. The over-the-counter healthcare division saw sales rise just 1.3% to $124.2 million. Prestige Brands continues to generate impressive FCF. The company grew FCF by $7.8 million y/y to $29.2 million.

Going forward, the focus will be on the performance of its two new acquisitions, Hydralyte and Insight Pharmaceuticals. I talked about these two acquisitions in my April article. The Hydralyte acquisition closed in April and Insight Pharmaceuticals is expected to close at the end of the current quarter. The company is just waiting on regulatory approval.

For FY15, Prestige Brands now forecasts that it will post EPS of $1.75 to $1.85. FCF is expected to be around $150 million. In my April article, I had forecast the company to earn $1.90 to $2.00 and post FCF of $175 million. The main reason for the lowered guidance is due to the acquisition of Insight Pharmaceuticals not closing yet. Overall, it was a decent report, but I'm more focused on how the company fares once the acquisition of Insight Pharmaceuticals is complete. With shares up 30% since my March article, it's best to book profits and move to the sidelines until we get some clarity on the integration of Hydralyte and Insight Pharmaceuticals.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.