Why Energizer's Shares Popped
Sep 18th 2012 4:45PM
Updated Sep 18th 2012 4:52PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of battery-led conglomerate Energizer Holdings (NYS: ENR) were powering up today, gaining as much as 12% in intraday trading after the company outlined new cost-cutting plans.
So what: Energizer's looking to get leaner and meaner, and it thinks that it can hit as much as $200 million in pre-tax cost savings through moves like cutting jobs, streamlining manufacturing, and shaving off some overhead spending. In its press release today, the company said 70% to 80% of that cost savings will fall to the bottom line, improving profitability, while the rest will be reinvested to help drive future growth.
Now what: This news obviously isn't universally cheery -- with U.S. unemployment already high, this is yet another major company looking to cut back its workforce. For investors, though, there's definitely reason for optimism today. Though the company will have to spend up front -- it expects on the order of 1.25 times the gross savings it'll end up with -- this plan could be a big long-term benefit.
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