Battery manufacturer EnerSys (NYSE: ENS) missed Wall Street’s revenue expectations in Q4 CY2025 as sales only rose 1.4% year on year to $919.1 million. On the other hand, the company expects next quarter’s revenue to be around $980 million, close to analysts’ estimates. Its non-GAAP profit of $2.77 per share was 1.8% above analysts’ consensus estimates.

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“We delivered strong earnings in the third quarter with adjusted diluted EPS ex 45X of $1.84, up 50%,” said Shawn O’Connell, President and Chief Executive Officer of EnerSys.

Company Overview

Supplying batteries that power equipment as big as mining rigs, EnerSys (NYSE: ENS) manufactures various kinds of batteries for a range of industries.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, EnerSys’s sales grew at a tepid 4.9% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. EnerSys’s recent performance shows its demand has slowed as its annualized revenue growth of 1% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its number of units sold. Over the last two years, EnerSys’s units sold averaged 1.1% year-on-year declines. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, EnerSys’s revenue grew by 1.4% year on year to $919.1 million, falling short of Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 1.9% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not catalyze better top-line performance yet.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

EnerSys has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.3%, higher than the broader industrials sector.

Analyzing the trend in its profitability, EnerSys’s operating margin rose by 5.1 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q4, EnerSys generated an operating margin profit margin of 13.5%, down 2.2 percentage points year on year. Since EnerSys’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

EnerSys’s EPS grew at an astounding 19.3% compounded annual growth rate over the last five years, higher than its 4.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into EnerSys’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, EnerSys’s operating margin declined this quarter but expanded by 5.1 percentage points over the last five years. Its share count also shrank by 13%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For EnerSys, its two-year annual EPS growth of 13.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q4, EnerSys reported adjusted EPS of $2.77, down from $3.12 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 1.8%. Over the next 12 months, Wall Street expects EnerSys’s full-year EPS of $10.38 to grow 9.5%.

Key Takeaways from EnerSys’s Q4 Results

We were impressed by how significantly EnerSys blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its sales volume missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 8.5% to $169.25 immediately after reporting.

EnerSys’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).