Energizer's (ENR) Reliance on Alkaline May Reduce Battery Market Share

October 12, 2009 11:59 AM EDT

Energizer (NYSE: ENR) may see an ebbing of its market share in the near future, according to a recent Barron's article. Energizer's crucial alkaline batteries business is in decline and it is admittedly weak in the increasingly popular rechargeable lithium-ion segment.

As the market for digital music players, digital cameras, and laptops increases, lithium-ion is a natural choice to power these devices. Lithium-ion batteries are lighter, store more energy, hold a charge longer, and are rechargeable. The alkaline segment makes up about 34% of Energizers total sales, and the market for them has grown only 4% over the past four years.

Retailers, such as Wal-Mart (NYSE: WMT), have also cut back on their battery kiosks as the recession drags on (though today a National Association of Business Economists report says the recession is over).

Energizer also diversifies into other markets, such as personal care. But Barron's reports that the company purchased Platex at the peak of the market, and spent over $1 billion on Schick-Wilkinson Sword. Schick adds shaving to Energizer's lineup, but the market declined 6% this year after growing 10% in 2008.

Despite this, investors bullish on Energizer claim that the company can see profits through a weaker dollar, favorable foreign-exchange outlook, and lower commodity costs. The company is believed to put more resources into marketing, and will rebound faster when the economy rebounds.

Energizer shares are up 1% to $65.99 today. EPS consensus is $1.17 for this quarter and $2.00 for the quarter ending December 2009.

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