Spectrum Brands Trades Below 200 & 50-Day SMA: How to Play the Stock?

Spectrum Brands Holdings Inc. SPB has encountered a notable resistance level, prompting caution among investors from a technical standpoint. It has been trading below the 200-day and 50-day simple moving averages (SMAs) for quite some time now, suggesting a bearish trend.Currently, at $73.38, SPB remains below its 200-day and 50-day SMAs of $86.95 and $81.72, respectively, indicating a possible sustained downward trend.SPB Trades Below 200 & 50-Day SMAImage Source: Zacks Investment ResearchSpectrum Brands shares have declined 22.7% in the past three months, compared with the industry’s 4.7% decline and the broader Consumer Discretionary sector's 4.2% drop. In the same period, the S&P 500 decreased by 3.9%.SPB Stock's Past Three Month PerformanceImage Source: Zacks Investment ResearchCurrent Pressures on SPB StockSpectrum Brands is facing financial challenges due to its heavy spending on brand-building, e-commerce and supply chain improvements. While these investments are expected to bolster the company’s growth in the long run, they are putting pressure on its finances right now. The company’s increased spending, along with investments in inventory, could make it harder to buy other businesses or return money to its shareholders, especially if the economy weakens.Spectrum Brands is also dealing with new trade tariffs, especially on products in its Home & Personal Care (HPC) segment, which will increase costs. Since many of its products come from China, higher tariffs could reduce profits before cost-saving measures take effect. The company is working on moving production to other locations, but this process takes time and may cause short-term problems.While SPB is restructuring its HPC segment, uncertainties around the deal negotiations or delays could mean the company gets less money than expected from selling parts of the business, which could slow down reinvestment in other areas.Spectrum Brands is struggling with foreign exchange issues, as the value of the U.S. dollar remains strong compared to other currencies, especially in Europe. This makes it harder for the company to grow sales in international markets, and even with financial strategies to limit the impact, currency changes might continue to hurt profits.Do SPB’s Strategic Initiatives Hold Potential?While Spectrum Brands faces notable challenges, its growth initiatives are expected to play a crucial role in reversing its stock performance. E-commerce momentum remained strong in the first quarter of fiscal 2025. Online sales outpaced in-store sales, contributing more than 30% in global HPC revenues and around the mid-20% range for Global Pet Care (GPC). To support this growth, the company is expanding inventory levels, improving fill rates, and launching products both online and in stores. Management plans to expand e-commerce further and expects robust sales trends to continue in fiscal 2025.Spectrum Brands has been benefiting from higher prices, cost savings and a better product mix, which helped boost profit margins in the first quarter of fiscal 2025. The company has been cutting costs by reducing salaried staff and lowering advertising and promotional expenses. It is also taking steps to manage the impact of new U.S. tariffs on Chinese imports while maintaining a disciplined cost structure.Looking ahead to fiscal 2025, Spectrum Brands expects a small increase in net sales and a mid-to-high single-digit rise in adjusted EBITDA, driven by higher sales and continued cost improvements. Despite economic challenges, the company remains committed to brand investment, cost efficiency and e-commerce expansion to support profitability in the coming year.Revised Estimates Signal Strength in SPBReflecting the positive sentiment, the Zacks Consensus Estimate for SPB’s fiscal 2024 and 2025 earnings has been unchanged in the past seven days.For fiscal 2025, the Zacks Consensus Estimate for SPB’s sales and EPS implies 0.4% and 24.6% year-over-year growth, respectively. The consensus mark for fiscal 2026 sales and earnings indicates 1.8% and 14.9% year-over-year increase, respectively.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Final Words on SPB StockSPB faces near-term pressures from rising costs, tariffs and financial constraints due to heavy investments in brand-building and e-commerce. The stock has underperformed the industry and is trading below key moving averages, signaling continued weakness. However, e-commerce momentum, cost-saving initiatives and pricing strategies have supported margin expansion, with management expecting modest sales and EBITDA growth in fiscal 2025. Current investors may consider holding their positions in SPB stock, while prospective investors might wait for a more attractive entry point. Spectrum Brands currently has a Zacks Rank #3 (Hold).Don’t Miss These Solid BetsSome better-ranked companies are Central Garden & Pet CENT, The Honest Company HNST and Funko, Inc. FNKO.Central Garden, one of 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 has a trailing four-quarter earnings surprise of 208.7%, on average. The Zacks Consensus Estimate for CENT’s fiscal 2025 sales and EPS indicates increases of 1% and 10.8%, respectively, from the year-ago period’s reported levels.The Honest is a digitally native, mission-driven brand focused on leading the clean lifestyle movement, creating a community for conscious consumers and seeking to disrupt multiple consumer product categories. HNST currently has a Zacks Rank #2 (Buy).The consensus estimate for HNST’s 2025 sales and EPS suggests growth of 5.2% and 166.7%, respectively, from the year-ago period’s reported levels. HNST has a trailing four-quarter earnings surprise of 64.4%, on average.Funko, a pop culture consumer products company, currently carries a Zacks Rank #2. FNKO has a trailing four-quarter earnings surprise of 115.7%, on average.The Zacks Consensus Estimate for Funko’s current financial-year earnings indicates growth of 110.3% from the year-ago reported figures.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>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 Central Garden & Pet Company (CENT): Free Stock Analysis Report Spectrum Brands Holdings Inc. (SPB): Free Stock Analysis Report Funko, Inc. (FNKO): Free Stock Analysis Report The Honest Company, Inc. (HNST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks