Are SPB's Brand Investments Enough to Spark Consistent Growth?

Spectrum Brands Holdings Inc. SPB is strategically investing in brand equity, digital channels and innovations, as part of its forward-looking strategy. The company has made significant investments in marketing, product development and e-commerce, efforts that are positioning it for long-term success and demand resilience, especially across its pet care, home & garden and grooming categories.

The company will continue its brand-focused investments across all its businesses. However certain marketing and advertising expenditures for its Home & Personal Care appliance business have been temporarily paused during this transition period. SPB’s sourcing, product development and commercial teams are actively identifying alternative supply sources outside of China and managing disruptions in the transition time. 

In second-quarter fiscal 2025, SPB increased its brand-focused investments by $3 million year over year. In addition, the company has been on track with new product development and innovations to drive growth. Management has emphasized that innovation continues to be a strategic priority, with sustained investment in product development. It has been investing in NPD, a new product innovation to drive top-line growth. Spectrum Brands targets leveraging and expanding into a more sustainable, consumable Pet category company.

Management believes positioning the company’s portfolio greatly toward power-branded, faster-turning consumables while also pursuing greater scale. As part of broader cost-reduction efforts, the company has strategically pulled back on certain advertising and marketing investments in the near term. While SPB’s brand investments are strategically aligned and pivotal for long-term success, these have not yet delivered consistent top-line expansion in the near term.

SPB’s Price Performance, Valuation and Estimates

Spectrum Brands’ shares have lost 35.7% year to date compared with the industry’s 9.5% drop.

From a valuation standpoint, SPB trades at a forward price-to-earnings ratio of 11.84X compared with the industry’s average of 11.87X.

The Zacks Consensus Estimate for SPB’s fiscal 2025 earnings indicates a year-over-year drop of 8.4% while that for fiscal 2026 EPS implies growth of 29.5%. The company’s EPS estimate for fiscal 2025 and fiscal 2026 has been stable in the past 30 days.

Spectrum Brands currently carries a Zacks Rank #3 (Hold).

Key Consumer Discretionary Picks

We have highlighted three better-ranked stocks, namely, Central Garden & Pet CENT, Crocs CROX and Royal Caribbean RCL.

Central Garden & Pet, among the leading companies in the U.S. pet supplies and lawn and garden supplies space, sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Central Garden & Pet has a trailing four-quarter earnings surprise of 206.6%, on average. The Zacks Consensus Estimate for CENT’s current financial-year sales indicates growth of 2.1% from the year-ago figure.

Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.1%, on average.

The consensus estimate for Crocs’ current financial-year sales implies an improvement of 0.8% from the prior-year actual.

Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 8.7%, on average.

The Zacks Consensus Estimate for RCL’s 2025 sales and EPS indicates an increase of 9.5% and 30.9%, respectively, from the year-ago reported levels.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research