EnerSys Looks Strong as Company Beats Estimates, Wins Battery Contract

Jul.27.08 | About: EnerSys (ENS)

EnerSys raised guidance for the first-quarter 2009 as it sees strong demand for battery products worldwide. The company has surprised on estimates for 4 consecutive quarters by 21.97%. EnerSys's forward P/E is 13.72.

Company Description

EnerSys (NYSE:ENS) manufactures reserve power and motive power batteries, charges, power equipment and battery accessories worldwide.

The company, a Zacks #1 Rank (Strong Buy) has customers in 100 countries and 17 manufacturing facilities in the United States, Europe and Asia.

Reserve power batteries are used in the telecommunications and utility industries and other applications requiring standby power. Motive power batteries are used in electric forklift trucks and other commercial electric powered vehicles.

ENS Enters Into Memo of Understanding with Lithium Technology

On July 10, EnerSys entered into a memorandum of understanding with Lithium Technology Corp. which called for the creation of a relationship between the two companies for the advancement of large lithium ion batteries. The agreement will be finalized in the coming months.

Under the agreement, ENS will become the exclusive distributor of Lithium's product line of large format lithium ion batteries and cells to the defense and aerospace markets.

EnerSys Wins Submarine Battery Contract

ENS has received $13 million worth of contracts from HDW, the German shipbuilder, for submarine batteries which will be delivered over the next several years. The contracts include the batteries as well as ongoing maintenance. EnerSys has been supplying submarine batteries to the defense sector for over 100 years.

ENS Beats Wall Street Estimates for the Fourth Quarter

On June 11, EnerSys reported fourth-quarter and full-year earnings and surprised on estimates by 7 cents, or 20%. Net income for the fourth quarter, excluding items, was $20.8 million, or 42 cents per share, compared to 22 cents per share in the fourth quarter of 2007.

Sales rose 41% to a record $582 million compared to the year ago period.

First Quarter 2009 Guidance Raised

The company had previously provided first quarter 2009 guidance on May 19 in the range of 40 cents to 44 cents per share. ENS raised that forecast due to continued strength in its global business to the range of 45 cents to 49 cents per share, excluding charges.

Consensus Estimates Rise for the First Quarter

Brokerage analysts responded to the record fourth quarter results by raising estimates. For the first quarter, consensus estimates have continued to rise in the last 30 days, up one cent to 49 cents per share from 48 cents per share. This is on the very high end of the company's guidance range.

Value Fundamentals

EnerSys's forward P/E is 13.72. Its price-to-book (P/B) is 2.29. The company has a one year return on equity [ROE] of 11.14%.

ENS reports first quarter earnings on Aug 6.