We Think Prestige Consumer Healthcare Is Small but Mighty, Boasting Leadership in Niche Markets

Equity Analyst

Keonhee Kim

Prestige Consumer Healthcare is one of the largest pure-play over-the-counter healthcare providers in the U.S. We expect the firm to grow through product innovations, increasing household penetration, and expanding its e-commerce presence. One way Prestige has tackled product innovations is through broadening its brands’ end markets; for example, Dramamine for a long time only played in the motion sickness space, but Prestige has spent the last number of years expanding its indication to the nausea market. While these outbreaks of categories can certainly expose Prestige to new competition, we believe it also affords the firm a new set of customers that it can win over. And given Prestige’s focus in small and niche categories, we don’t expect the company to try and compete with blockbuster brands from consumer packaged goods, or CPG, giants. Rather, we believe it will seek out adjacent categories that might be underpenetrated or composed of minor brands to displace with its recognizable brands. 

Increasing household penetration is also a key focus for Prestige’s future growth. We believe an increasing awareness of self-care to be a major catalyst in achieving this goal as an abundance of online resources helps consumers identify their own ailments and find necessary remedies. And we believe consumer healthcare is among CPG categories that benefits from this more than others, as many minor conditions, such as sore throat, eye redness, and motion sickness, usually go untreated. The company was successful at this strategy with Hydralyte, an oral hydration booster, which doubled its penetration rate in Australia to 10% over the last few years. While educating consumers about health issues and solutions that Prestige offers is certainly not a quick turnaround, especially given the company’s small advertising and marketing budget compared with its larger competitors, we believe Prestige has a diverse portfolio of strong brands that can accomplish this over the long term, especially as the overall population continues to age.

Business Strategy & Outlook

We assign Prestige Consumer Healthcare a narrow moat rating because we believe the company’s strong brand reputation and pricing power (intangible assets) should continue to support economic profits for the next 10 years. 

Over 80% of Prestige’s total sales are derived from its portfolio of 18 major brands. Many of Prestige’s brands play in niche categories—Boudreaux’s Butt Paste is baby ointment used to treat diaper rash, Debrox is an earwax removal drop, and Monistat is a vaginal anti-fungal cream. While we believe Prestige lags consumer health giants like Kenvue and Haleon in broad product channels such as analgesics, cough remedies, and oral care, we believe the company has successfully carved out a meaningful presence in smaller unique categories and garnered impressive market share. Prestige’s brands have also held their market leadership for over a decade, demonstrating stability of their market share. Lastly, Prestige’s brands do not have a meaningful competitor in most markets, and the rest of the space is shared among private-label brands that have failed to amass significant shares.

Many of Prestige’s brands come at a moderate to significant pricing premium when compared with its close competitors and that premium is magnified when compared with private label. But even at higher prices, we see that consumers continue to choose Prestige’s brands over its competitors’. One of the main reasons behind Prestige’s market leadership, in our opinion, is the significant brand power and customer loyalty that its brands have amassed with decades of history on the shelf and inside people’s homes. We also believe a number of Prestige’s brands are sought out in times of poor health, so the importance of brand familiarity and trust is heightened. And because Prestige’s brands are backed by years of scientific research, they benefit from recommendations of professionals across its mix of products. For example, Dramamine is the number one pharmacist-recommended brand for motion sickness, and Monistat is the number one gynecologist-recommended brand for vaginal anti-fungal remedies. The leading market share in many of the categories it plays in, even at higher prices, illustrates Prestige’s strong brand reputation and high levels of consumer trust and loyalty.

To ensure its brand prowess and maintain its leading position, Prestige continues to innovate and launch new products to align with everchanging consumer preferences. We estimate that the firm spends a low-single-digit percentage of sales on research and development and 15% on advertising and marketing, on par with its competitors Kenvue (4% and 10% of sales on R&D and A&M, respectively) and Procter & Gamble (3% and 11%, respectively). We believe Prestige can maintain its leading share position and entrenched standing with retailers through product innovation over the next 10 years thanks to its strong brand power and innovations.

Narrow

Economic Moat

Prestige Brands Holdings

Prestige Consumer Healthcare, Inc. engages in the marketing, sale, and distribution of pharmaceutical drugs and consumer products. It operates through the following segments: North American OTC Healthcare and International OTC Healthcare. The North American and International OTC Healthcare segments manages the following brands: BC/Goody's, Beano, Boudreaux's Butt Paste, Chloraseptic, Clear Eyes, Compound W, Debrox, DenTek, Dramamine, Efferdent, Fess, Fleet, Gaviscon, Hydralyte, Luden's, Monistat, Nix, Pedia-Lax, and Summer's Eve. The company was founded in 1996 and is headquartered in Tarrytown, NY.

Earnings data Q4 2024

PBH reports record fiscal 2023 results, addresses inflation challenges

PBH's strong fiscal 2023 performance was highlighted, but challenges from inflation and foreign currency headwinds were acknowledged. The company is focused on leveraging opportunities for growth and remains committed to its long-term goals.

PBH reports resilient Q1 performance, anticipates high single-digit Q2 growth

PBH's Q1 performance demonstrated resilience with strong sales and margin improvements. While facing challenges in EBITDA and gross margin, the company's strategic focus on brand growth, debt reduction, and share buyback program positions it well for future opportunities. With a reaffirmed full-year outlook and anticipated Q2 growth, PBH remains focused on sustainable growth and financial discipline.

Prestige Consumer Healthcare reports strong Q2 performance and reaffirms outlook

Prestige Consumer Healthcare (PBH) delivered strong Q2 2024 results, with robust net sales and earnings per share growth. The company's successful debt reduction, strong free cash flow generation, and reaffirmed full-year outlook demonstrate financial stability and confidence in future performance. However, the company faces challenges related to market competition, product recalls, and various market dynamics. Despite these challenges, the company's focus on brand-building, innovation, and growth drivers presents opportunities for continued expansion and market relevance.

Prestige Consumer Healthcare Exceeds Q3 Expectations, Eyes Long-Term Growth

Prestige Consumer Healthcare's Q3 performance exceeded expectations, driven by strong international growth and increased marketing reinvestment. While facing challenges in meeting fiscal '24 revenue guidance, the company remains focused on long-term financial growth targets and evaluating opportunities for divesting non-core brands.

Revenue

Cost of revenue

Gross profit

Operating expenses

SG&A

Other

Operating income

EBITDA

Net income

Earnings per share

Total assets

Current assets

Cash & equivalents

Receivables

Inventory

Non-current assets

Net PPE

Intangibles

Total liabilities

Current liabilities

Short term debt

Income tax payable

Non-current liabilities

Long-term debt

Total equity

Stockholders equity

Minority interest

Total liabilities & equity

Total debt

Net debt

Book value per share

Cash from operations

Funds from operations

Change in working capital

Cash from investing

Capital expenditure

Purchase/sale of investments

Purchase/sale of business

Other sources

Cash from financing

Change in stock

Change in debt

Cash dividends paid

Cash from other sources

Net change in cash

Free cash flow

Whether you're a value, growth, or momentum investor, finding strong stocks becomes easier with the Zacks Style Scores, a top feature of the Zacks Premium research service.

Here's Why Prestige Consumer Healthcare (PBH) is a Strong Value Stock

The nausea-fighting brand is highlighting the cultural impact of barf bags and ushering them into a new era with a documentary, a limited-edition collection of upcycled bags and a custom wearable art piece made from vintage bags The nausea-fighting brand is highlighting the cultural impact of barf bags and ushering them into a new era with a documentary, a limited-edition collection of upcycled bags and a custom wearable art piece made from vintage bags

Dramamine® Celebrates its 75th Anniversary by Reviving an Unexpected Partner: The Barf Bag

Prestige Consumer (PBH) develops long-term partnerships across its diverse retail footprint and invests heavily in the e-commerce channel.

Prestige Consumer (PBH) Banks on its Portfolio Amid Cost Woes

The Zacks Style Scores offers investors a way to easily find top-rated stocks based on their investing style. Here's why you should take advantage.

Here's Why Prestige Consumer Healthcare (PBH) is a Strong Momentum Stock

Why Prestige Consumer Healthcare (PBH) is a Top Value Stock for the Long-Term

Investors are optimistic about Prestige Consumer (PBH) on increasing gain in market share for its wide array of brands.

Reasons to Retain Prestige Consumer (PBH) Stock for Now

Wondering how to pick strong, market-beating stocks for your investment portfolio? Look no further than the Zacks Style Scores.

Why Prestige Consumer Healthcare (PBH) is a Top Momentum Stock for the Long-Term

Prestige Consumer's (PBH) third-quarter fiscal 2024 results reflect the power of a well-positioned and diversified portfolio.

Prestige Consumer (PBH) Q3 Earnings Top, Gross Margin Expands

Prestige Consumer Healthcare Inc. (PBH) Q3 2024 Earnings Call Transcript

Although the revenue and EPS for Prestige Consumer Healthcare (PBH) give a sense of how its business performed in the quarter ended December 2023, it might be worth considering how some key metrics compare with Wall Street estimates and the year-ago numbers.

Prestige Consumer Healthcare (PBH) Reports Q3 Earnings: What Key Metrics Have to Say

Prestige Consumer Healthcare (PBH) came out with quarterly earnings of $1.06 per share, beating the Zacks Consensus Estimate of $1.04 per share. This compares to earnings of $1.04 per share a year ago.

Prestige Consumer Healthcare (PBH) Surpasses Q3 Earnings and Revenue Estimates

TARRYTOWN, N.Y., Feb. 08, 2024 (GLOBE NEWSWIRE) -- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its third quarter and first nine months ended December 31, 2023.

Prestige Consumer Healthcare Inc. Reports Third Quarter Fiscal 2024 Results

Boston Scientific

Investors interested in stocks from the Medical - Products sector have probably already heard of Prestige Consumer Healthcare (PBH) and Boston Scientific (BSX). But which of these two stocks offers value investors a better bang for their buck right now?

PBH vs. BSX: Which Stock Should Value Investors Buy Now?

TARRYTOWN, N.Y., Feb. 02, 2024 (GLOBE NEWSWIRE) -- Insight Pharmaceuticals, a Prestige Consumer Healthcare Inc. company (“Insight”), is voluntarily recalling two lots of TING® 1% Tolnaftate Athlete's Foot Spray Antifungal Spray Liquid to the consumer level. A recent review by our manufacturer and their third-party lab found that samples from two lots of the product contained elevated levels of benzene. While benzene is not an ingredient in any Ting® Antifungal Spray products, the review showed that unexpected levels of benzene came from the propellant that sprays the product out of the can. Importantly, no other lots of TING® 1% Tolnaftate Athlete's Foot Spray Antifungal Spray Liquid (either before or after these batch codes) and no other Ting® Antifungal Spray Liquid products are in the scope of this recall and may continue to be used by consumers safely and as intended.

Insight Pharmaceuticals Issues Voluntary Nationwide Recall of TING® 1% Tolnaftate Athlete's Foot Spray Antifungal Spray Liquid Due to the Presence of Benzene

Prestige Consumer Healthcare (PBH) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Prestige Consumer Healthcare (PBH) Reports Next Week: What Awaits?

Quest Diagnostics

Hologic

Prestige Consumer Health (PBH), Quest Diagnostics (DGX) and Hologic (HOLX) are currently at discounted zone that are expected to provide long-term gains.

3 Discounted MedTech Stocks Poised for Sturdy Growth in 2024

Investors interested in Medical - Products stocks are likely familiar with Prestige Consumer Healthcare (PBH) and Boston Scientific (BSX). But which of these two companies is the best option for those looking for undervalued stocks?

PBH or BSX: Which Is the Better Value Stock Right Now?

TARRYTOWN, N.Y., Jan. 10, 2024 (GLOBE NEWSWIRE) -- Prestige Consumer Healthcare Inc. (NYSE:PBH) today announced that it will issue its fiscal 2024 third quarter earnings release on Thursday, February 8, 2024 before the opening of the market. The Company will host a conference call to discuss the results that same morning at 8:30 a.m. ET.

Prestige Consumer Healthcare Inc. to Release Fiscal 2024 Third Quarter Earnings Results

Haemonetics

Neogen

Royal Philips

Despite the ongoing macro headwinds, recovering demand for medical procedures and cost-cutting initiatives should support the Zacks Medical-Products industry. PHG, NEOG, HAE and PBH are well-poised to gain from the favorable factors.

4 Medical Product Stocks to Buy Amid Industry Challenges

Investors with an interest in Medical - Products stocks have likely encountered both Prestige Consumer Healthcare (PBH) and Boston Scientific (BSX). But which of these two stocks presents investors with the better value opportunity right now?

PBH vs. BSX: Which Stock Is the Better Value Option?

Investors remain optimistic about Prestige Consumer (PBH), backed by the robust strength of its consumer brands portfolio.

Reasons to Buy Prestige Consumer (PBH) Stock for Now

TARRYTOWN, N.Y., Dec. 22, 2023 (GLOBE NEWSWIRE) -- Insight Pharmaceuticals, a Prestige Consumer Healthcare Inc. company (“Insight”), is voluntarily recalling one lot of Americaine® 20% Benzocaine Topical Anesthetic Spray to the consumer level. While benzene is not an ingredient in any Americaine® 20% Benzocaine Topical Anesthetic Spray products, a recent review by our manufacturer and their third-party lab found that a sample from one lot of the product showed a low level of benzene came from the propellant that sprays the product out of the can. Importantly, no other lots of Americaine® 20% Benzocaine Topical Anesthetic Spray (either before or after this batch code) are in the scope of this recall and may continue to be used by consumers safely and as intended.

Insight Pharmaceuticals Issues Voluntary Nationwide Recall of Americaine® 20% Benzocaine Topical Anesthetic Spray Due to the Presence of Benzene

TARRYTOWN, N.Y., Nov. 24, 2023 (GLOBE NEWSWIRE) -- Insight Pharmaceuticals, a Prestige Consumer Healthcare Inc. company (“Insight”), is voluntarily recalling two lots of TING® 2% Miconazole Nitrate Athlete's Foot Spray Antifungal Spray Powder to the consumer level. A recent review by our manufacturer and their third-party lab found that samples from two lots of the product contained elevated levels of benzene. While benzene is not an ingredient in any Ting® Antifungal Spray products, the review showed that unexpected levels of benzene came from the propellant that sprays the product out of the can. Importantly, no other lots of TING® 2% Miconazole Nitrate Athlete's Foot Spray Antifungal Spray Powder (either before or after these batch codes) and no other Ting® Antifungal Spray products are in the scope of this recall and may continue to be used by consumers safely and as intended.

Insight Pharmaceuticals Issues Voluntary Nationwide Recall of TING® 2% Miconazole Nitrate Athlete's Foot Spray Antifungal Spray Powder Due to the Presence of Benzene

Prestige Consumer's (PBH) long-term brand-building efforts, efficient marketing, channel development and innovation help the company to continually hold a leading market share position.

Prestige Consumer's (PBH) Brand Building, Innovation Aid Growth

Prestige Consumer Healthcare Inc. (NYSE:PBH ) Q2 2024 Earnings Conference Call November 2, 2023 8:30 AM ET Company Participants Phil Terpolilli - CFA Ron Lombardi - President and CEO Christine Sacco - Chief Financial Officer Conference Call Participants Rupesh Parikh - Oppenheimer & Co Susan Anderson - Canaccord Genuity Jon Andersen - William Blair Keonhee Kim - Morningstar Operator Good day, and thank you for standing by. Welcome to the Q2 2024 Prestige Consumer Healthcare Earnings Conference Call.

News for Prestige Brands Holdings Stock (PBH)