Helen of Troy Limited (HELE): Get Defensive With This Consumer Products Company

The Clorox Co (NYSE:CLX), another competitor, has also been seeing fairly static EPS growth over the last few years. The firm is best known for its bleach and cleaning products, but also produces things such as kitty litter and natural personal care products. Growth has stagnated after hitting a peak of $4.24 in 2010, dipping to $4.10 in 2012. While analysts are expecting a bit of an improvement in fiscal 2013, the 3-5 year expected growth rate of around 3% isn’t particularly encouraging, and certainly lower than Helen of Troy Limited (NASDAQ:HELE)’s 24.4%. Additionally, the stock looks fairly expensive at the moment.

Valuations and metrics

Helen of Troy Limited (NASDAQ:HELE) stock looks to offer fairly good value for money right now, trading at only 11.60 times trailing earnings versus Clorox’ 20.02. Lifetime Brands Inc (NASDAQ:LCUT) is even cheaper at 9.39, but as noted it isn’t growing earnings very well. The Price/Earnings to Growth (PEG) ratio of 0.79 is very low, as is the price-to-sales at 1.04. The Clorox Co (NYSE:CLX)’ PEG ratio is very high at 2.81, while Lifetime Brands Inc (NASDAQ:LCUT) has a PEG ratio of 1.06. The operating margin of around 12% is fairly good compared to the industry, sitting between Lifetime’s 5% and The Clorox Co (NYSE:CLX)’ 17%, and the return on equity of 13.42% is decent. Based on these metrics, the stock looks slightly undervalued at the moment.

The bottom line

For those investors looking to get defensive with a company that produces essential goods, I think Helen of Troy Limited (NASDAQ:HELE) is worth considering. The company is growing earnings steadily, and the stock has been performing very well recently. Moreover, it is trading at quite a low valuation compared to the industry and the broader market, which means the stock may have more room to rise.

The article Get Defensive With This Consumer Products Company originally appeared on Fool.com and is written by Daniel James.

Daniel James has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Daniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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