EPC

Edgewell Personal Care Co

Consumer


Presented:08/28/2019
Price:$28.00
Cap:$1.52B
Current Price:$35.48
Cap:$1.75B

Presented

Date08/28/2019
Price$28.00
Market Cap$1.52B
Ent Value$2.41B
P/E RatioN/A
Book Value$25.02
Div Yield0%
Shares O/S54.16M
Ave Daily Vol894,526
Short Int12.83%

Current

Price$35.48
Market Cap$1.75B
Edgewell Personal Care Co. is engaged in manufacturing and marketing of personal care products. It operates through the following business segments: Wet Shave, Sun and Skin Care, Feminine Care, and All Other. The Wet Shave segment includes razor handle and refillable blades, disposable shave products, and shave gels and creams. The Sun and Skin segment comprises of Banana Boat, Hawaiian Tropic, and Wet Ones brands. The Feminine Care segment consists of tampons, pads and liners sold under the Playtex, Stayfree, Carefree, and o.b brands. The All Other segment refers to infant care products, such as bottles, cups, and pacifiers, under the Playtex, OrthoPro and Binky brand names, as well as the Diaper Genie, and Litter Genie disposal systems. The company was founded in 1999 and is headquartered in St. Louis, MO.

Publicly traded companies mentioned herein: Edgewell Personal Care Co (EPC), Energizer Holdings Inc (ENR), Procter & Gamble Co/The (PG), Unilever NV (UN), Walmart Inc (WMT)

Highlights

The presenter is short shares of Edgewell Personal Care Co (EPC), which spun out of Energizer (ENR) in 2015. EPC has two lines of business, one of which is its shaving business (60%) that includes Schick, Hydro, and other “tired brands.” The rest of the company sells other personal care products such as sunscreen and feminine care products. He has been bearish on EPC’s shaving business for a while, calling it unfixable due to years of underinvestment, but more recently was “shocked” by its aggressive move in acquiring Harry’s and giving control of the US shaving business to Harry’s founders. With shares currently priced at ~$28, he sees meaningful downside to $21 – $22 per share in the base-case scenario of missing targets on the legacy business and taking longer than expected on Harry’s expected EBITDA margin expansion. He further estimates downside to $14 – $15 per share in a potential credit stress scenario. 

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