PBH changes
Pick any two versions below to diff them.
- Price
- $49.20 → $44.17(−10.2%)
- Discount category
- Well below intrinsic value → Far below intrinsic value
- Next earnings
- Nov 5, 2026 → Feb 5, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- The market fears that Prestige has lost part of its eye care business and that its new debt leaves little room for error. Its suppliers could not make enough Clear Eyes, so revenue fell 4.3% in the year to March 2026. Prestige then bought Breathe Right for $1.045 billion with a new term loan, so net debt rose to about $2 billion at June 30, 2026. Investors doubt that Pillar5, the eye care plant it bought, can raise output soon enough. For the gap to close, three things must be true. removed: Eye care shipments added: Clear Eyes output at Pillar5 must removed: improve, as the company projects for added: become steady. On November 5, 2026, Prestige cut its fiscal removed: 2027, and added: 2027 outlook because Clear Eyes production varied, so organic revenue must added: stay about flat this year and grow removed: 1% to 3%. added: again in fiscal 2028. Breathe Right and LaCorium must add about $190 million of revenue this year and lift the gross margin to just above 57%. Adjusted free cash flow must reach removed: $270 added: $265 million or more, and the company must use it to reduce debt. The fiscal removed: Q2 added: Q3 report removed: on November 5, 2026, added: in about February 2027 is the next test, and the full-year report in May 2027 shows whether the plan worked. If supply and debt reduction stay on plan, the gap can close over the next four to six quarters.
- Risks
- Clear Eyes supply depends on a small number of sterile plants, including Pillar5. added: Production at Pillar5 varied in fiscal Q2 2027, and Prestige expects limited Clear Eyes supply in the second half. If output does not removed: rise as planned, added: become steady, eye care sales can fall removed: again, added: more, and competitors can take shelf space. Net debt rose to about $2 billion after the Breathe Right purchase, and most of the new term loan has a floating rate. A fall in cash flow or higher rates would slow debt reduction. Prestige must combine two new businesses at the same time as it fixes eye care supply. Breathe Right must grow under new owners for the price to make sense. Store brands sell similar products at lower prices. If consumers spend less, they can switch to cheaper store brands.
- Balance sheet
- Cash: removed: $89M added: $47M Debt: removed: $2.0B added: $2.1B Net debt: removed: $2.0B added: $2.1B Interest cover: removed: 3.8× added: 2.7× Undrawn credit line: removed: $194M, added: $202M, to June 2031 Debt due within 12 months: removed: $14M added: $0.0M Last debt due: 2034 Prestige funds itself with senior unsecured notes, a term loan and an asset-based revolving credit line. At removed: June added: September 30, 2026, it had removed: $89.1 added: $46.5 million of cash and removed: $2,045 added: $2,110 million of removed: debt: added: debt principal: $600 million of 3.750% notes due April 2031, $400 million of removed: 5.125% added: 6.250% notes due removed: January 2028 added: July 2034, which it issued in July 2026 to repay its notes due 2028, and a removed: new $1,045 added: $1,110 million term loan due removed: in added: June 2033 at SOFR plus 2.00%. removed: The term loan pays 0.25% of its principal each quarter, which is most of the debt due within 12 months. After June 30, 2026, Prestige borrowed $95 million more on the term loan for removed: LaCorium. It also issued $400 million of 6.250% notes due added: LaCorium on July removed: 2034 added: 1, 2026, and removed: used added: it repaid $30 million of the removed: money to repay the notes added: term loan early in fiscal Q2 2027. Because of these early payments, no principal is due removed: 2028. added: before fiscal 2029. The company said that net debt was about $2 billion at removed: June added: September 30, 2026, and that it will use free cash flow to reduce removed: debt for the rest of fiscal 2027. The Breathe Right purchase brings about $150 million of expected tax benefits. added: debt. Interest cover is operating income divided by net interest expense for the quarter to removed: June added: September 30, removed: 2026. added: 2026, and net interest expense rose to $30.0 million from $10.0 million a year earlier because of the acquisition debt. The revolving credit line of $225 million had no borrowings and removed: $193.5 added: $202.4 million of capacity. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Nov 5, 2026: Fiscal Q2 2027 results: eye care supply and debt. removed: Pending. added: Failed. Watch: Positive organic revenue growth with better eye care shipments and lower net debt pass; a new fall in eye care sales or a cut to the outlook fails. added: Outcome: Organic revenue fell 1.6% with lower Clear Eyes sales, and Prestige cut its fiscal 2027 revenue, EPS and free cash flow outlook because Clear Eyes production at Pillar5 varied. Feb added: 5, 2027 (estimate): Fiscal Q3 2027 results: Breathe Right and cash flow. Pending. Watch: Results on track for adjusted free cash flow of removed: $270 added: $265 million or more and removed: the adjusted EPS removed: outlook added: of $4.48 to $4.55 pass; removed: a lower added: another cut to the outlook fails. May 2027 (estimate): Fiscal 2027 results and fiscal 2028 outlook. Pending. Watch: Organic growth of 1% to 3% for the year, eye care back to growth and net debt well below $2 billion pass; another year of eye care decline fails.
- Recent events
- added: Nov 5, 2026: Prestige reported fiscal Q2 2027 results. Revenue rose 22.7% to $336.3 million with $65.1 million from Breathe Right and LaCorium, but organic revenue fell 1.6% because of order timing and lower Clear Eyes sales. GAAP EPS fell to $0.53 from $0.86, and adjusted EPS rose to $1.13 from $1.07. Prestige cut its fiscal 2027 outlook to revenue of $1,280 million to $1,290 million, about flat organic revenue, adjusted EPS of $4.48 to $4.55 and adjusted free cash flow of $265 million or more, because Clear Eyes production at Pillar5 varied and will limit supply in the second half. It said that the rest of the portfolio and the acquisitions are on plan. Oct 14, 2026: Prestige said that it will report its fiscal 2027 second quarter results before the market opens on November 5, 2026. Aug 14, 2026: Jeffrey Zerillo, Senior Vice President of Operations, retired from the company. Aug 6, 2026: Prestige reported fiscal Q1 2027 results. Revenue rose 6.5% to $265.7 million, and organic revenue grew 3.2%. GAAP EPS fell to $0.61 from $0.95 because of acquisition costs, and adjusted EPS rose to $0.98 from $0.95. Adjusted free cash flow was a record $83.7 million. Prestige raised its fiscal 2027 outlook to revenue of $1,290 million to $1,315 million and adjusted EPS of $4.55 to $4.65, with the acquisitions. Jul 15, 2026: Prestige issued $400 million of 6.250% senior notes due 2034. It used the money to repay its 5.125% notes due 2028, so it has no large debt due before 2031. Jul 1, 2026: Prestige completed the purchase of LaCorium Health, an Australian skin care company, with $95 million of new term loans. LaCorium has about $40 million of annual revenue. Jun 12, 2026: Prestige completed the purchase of Breathe Right and other brands from Foundation Consumer Brands for $1.045 billion in cash, funded with a new seven-year term loan. The brands have about $200 million of annual revenue. May 13, 2026: Prestige reported results for the year to March 31, 2026. Revenue fell 4.3% to $1,088.7 million because it could not supply enough Clear Eyes. Q4 revenue fell 5.0%. Diluted EPS was $3.91, and adjusted diluted EPS was $4.38. Free cash flow was $246.4 million.