Spectrum Brands beats earnings on pet care growth, buyback
Consumer products company authorizes $300M repurchase program despite tariff headwinds
Spectrum Brands Holdings reported first-quarter earnings that surpassed analyst expectations by a wide margin, driven by renewed growth in its pet care segment and a newly authorized share repurchase program, despite ongoing tariff pressures weighing on profitability.
The Middleton, Wisconsin-based consumer products company posted adjusted earnings per share of $1.40, beating analyst estimates of $0.76 by 84.6%. Revenue reached $677 million, edging past the $668 million consensus, though net sales declined 3.3% from the prior year.
The earnings beat came as Spectrum Brands authorized a new $300 million share repurchase program, signaling confidence in its ability to generate cash flow despite macroeconomic headwinds. The company repurchased 600,000 shares for $36 million during the first quarter.
Spectrum Brands' Global Pet Care business—the company's largest and most profitable division—returned to growth during the quarter, providing a bright spot amid broader challenges. The segment, which owns brands including Tetra and 8in1, benefits from relatively stable pet ownership trends and the premiumization of pet products.
However, the company continues to grapple with tariff-related costs. Adjusted EBITDA fell 19.5% to $62.6 million, while organic sales declined 6.0%. Chief Executive Officer David Maura has previously referred to trade policy as "the tariff torpedo," highlighting the persistent margin pressure from U.S.-China trade tensions.
Despite these challenges, management reaffirmed its fiscal 2026 guidance, projecting flat to low single-digit revenue growth and low single-digit EBITDA growth for the full year. The company's net debt leverage stands at 1.65 times.
Royal Bank of Canada maintained an "outperform" rating on the stock with a $75 price target heading into earnings. The broader analyst consensus rates Spectrum Brands a "strong buy" with an average 12-month target of $74.75, according to MarketBeat data.
The company's diverse portfolio of brands—including Remington personal care products, George Foreman grills, and Black+Decker home appliances—provides exposure to multiple consumer categories. However, performance has been uneven, with the Garden and Personal Care divisions reporting sales declines during the quarter.
Spectrum Brands shares have gained 2.2% to $68.44 in early trading following the earnings announcement, though the stock remains well below its 52-week high of $79.50 reached last year. The company currently trades at approximately 17 times trailing earnings, with a dividend yield of 2.9%.
Investors will be watching whether the pet care recovery can be sustained and whether the company's pricing actions will be sufficient to offset ongoing tariff pressure. The new share repurchase authorization represents about 19% of the company's current market capitalization, providing support for the stock as management executes its turnaround strategy.