Trump announces trade deal with EU following months of negotiations
On Thursday, Helen of Troy (NASDAQ:HELE), a designer, developer, and marketer of consumer housewares and other home and health products, saw its price target raised by DA Davidson from $67.00 to $71.00. The firm has kept a Neutral rating on the stock. The adjustment follows the company's announcement of better-than-anticipated results for the second quarter of fiscal year 2025 and its decision to uphold the full-year 2025 sales and earnings per share (EPS) guidance.
The company's shares experienced a significant rise, closing up 18% on the day of the report. Despite this positive performance, DA Davidson noted that Helen of Troy's inventory levels continued to increase, leading to a reduction in the firm's free cash flow (FCF) estimate for fiscal year 2025 by 16%, down to $190 million. The firm's annual EPS estimates remain unchanged.
DA Davidson has also begun forecasting for fiscal year 2027, setting an estimated EPS of $7.92. The raised price target is based on a 9 times multiple of the projected EPS for fiscal year 2027. The analyst pointed out that while the decline in sales is slowing, there is uncertainty regarding the timing and likelihood of a return to a steady low-single digit sales growth pattern. This is attributed to the ongoing sluggishness in the product categories and a competitive market environment.
Helen of Troy's recent performance has been closely monitored by investors, as the company navigates the challenges posed by market conditions. The maintenance of its FY25 sales and EPS guidance, despite the adjustments to free cash flow expectations, suggests a degree of stability in its operations amidst these challenges.
In other recent news, consumer products company Helen of Troy reported Q2 fiscal 2025 results that exceeded market expectations. Despite a consolidated net sales decline of 3.5% attributed to decreased demand in the Beauty & Wellness sector, the company saw a 9% increase in U.S. distribution and significant international sales growth. Adjusted EPS and net income were reported at $1.21 and $17 million respectively.
The company's strategic initiative, Project Pegasus, is contributing to its performance, with the integration of Curlsmith into the distribution network ahead of schedule. However, the divestiture process has been paused due to unsatisfactory offers.
Helen of Troy anticipates full-year net sales to be between $1.885 billion and $1.935 billion, with adjusted EPS expected between $7 and $7.50. As part of their long-term focus, the company is investing in brand innovation and marketing, while planning to reduce tariff exposure by diversifying production outside of China. These are some of the recent developments shaping the company's trajectory.
InvestingPro Insights
Helen of Troy's recent performance, as highlighted in the article, is further illuminated by real-time data from InvestingPro. The company's market capitalization stands at $1.67 billion, with a P/E ratio of 10.35, indicating that the stock may be undervalued relative to its earnings. This aligns with the article's mention of the company's better-than-anticipated Q2 results.
InvestingPro Tips reveal that management has been aggressively buying back shares, which could be seen as a vote of confidence in the company's future prospects. This action may also contribute to the high shareholder yield noted in another tip. These factors could potentially support the stock's recent 18% rise mentioned in the article.
The data shows a strong return over the last month (35.02%) and three months (19.04%), which corroborates the positive market reaction to Helen of Troy's recent performance. However, the 6-month return of -29.66% suggests longer-term challenges, possibly related to the inventory issues and competitive market environment discussed in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Helen of Troy, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.