What Happened?
Shares of personal care company Edgewell Personal Care (NYSE: EPC) jumped 3% in the afternoon session after the release of a favorable Consumer Price Index (CPI) report showed inflation cooling more than anticipated. The July report from the Bureau of Labor Statistics indicated a year-over-year inflation rate of 2.7%, just below the 2.8% economists had forecast. This suggests that price pressures on consumers may be easing. Particularly beneficial for the sector was the news that the food index remained flat, with grocery prices even declining by 0.1% month-over-month. This development is seen as a positive for the profitability of food, beverage, and personal care companies, as lower input costs and increased consumer purchasing power could boost sales. A Federal Reserve official's comments on the same day, noting that consumer spending fundamentals remain solid, further bolstered investor confidence in the sector's resilience.
After the initial pop the shares cooled down to $22.58, up 2.4% from previous close.
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What Is The Market Telling Us
Edgewell Personal Care’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 8.3% on the news that Morgan Stanley upgraded the stock to Equalweight, suggesting the shares may have bottomed out after a steep post-earnings decline. The upgrade followed a steep plunge in the stock's price after the company reported disappointing third-quarter results and lowered its full-year guidance. Edgewell's sales and earnings per share both missed analyst expectations, which the company blamed on a weak sun care season. Morgan Stanley noted that the stock's valuation became compressed after its significant drop. Separately, analysts at Canaccord Genuity maintained a Buy rating, and they believed the stock was oversold, even as they reduced their price target.
Edgewell Personal Care is down 32.6% since the beginning of the year, and at $22.58 per share, it is trading 43.9% below its 52-week high of $40.22 from August 2024. Investors who bought $1,000 worth of Edgewell Personal Care’s shares 5 years ago would now be looking at an investment worth $734.14.
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