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Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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Equity Bottom-Up

Prestige Brands Holdings, Inc / Equity Bottom-Up

<ul><li>On August 6, PBH reported 1QFY27 EPS of $0.98 versus consensus of $0.89. </li><li>Sales were $265.7MM, +6.5% Y/Y, with organic sales +3.2% and the Breathe Right acquisition contributing $5.9MM or 2.4%. </li><li>The pull-forward of retail orders contributed 2% to growth. </li></ul>

On August 6, PBH reported 1QFY27 EPS of $0.98 versus consensus of $0.89. Sales were $265.7MM, +6.5% Y/Y, with organic sales +3.2% and the Breathe Right acquisition contributing $5.9MM or 2.4%. The pull-forward of retail orders contributed 2% to growth. 

PBH: Deals Increase Sales Base by More than 20%

<ul><li>PBH reported 4QFY26 adjusted EPS of $1.23 versus $1.32 in 4QFY25, a decline of 6.8% and below expectations. Our estimate was $1.40 and consensus was $1.39.</li><li>Full-year FY26 adjusted EPS of $4.38 came in below the company’s own expectation of ~$4.54 and below the $4.52 reported in FY25.</li><li>Revenue of $281.6 million in the quarter fell 5.0% Y/Y on a reported basis and 6.4% organically, also below expectations, reflecting a combination of persistent Clear Eyes supply constraints and incremental shipping disruptions in the Middle East that further pressured 4Q results.</li></ul>

PBH reported 4QFY26 adjusted EPS of $1.23 versus $1.32 in 4QFY25, a decline of 6.8% and below expectations. Our estimate was $1.40 and consensus was $1.39.Full-year FY26 adjusted EPS of $4.38 came in below the company’s own expectation of ~$4.54 and below the $4.52 reported in FY25.Revenue of $281.6 million in the quarter fell 5.0% Y/Y on a reported basis and 6.4% organically, also below expectations, reflecting a combination of persistent Clear Eyes supply constraints and incremental shipping disruptions in the Middle East that further pressured 4Q results.

PBH: Supply-Driven 4QFY26 Miss Obscures a Strengthening Multi-Year Story

<ul><li>PBH announced the acquisition of Breathe Right® and a portfolio of complementary brands from Foundation Consumer Healthcare for $1.045 billion, or ~$900 million net of anticipated tax benefits.</li><li>The transaction is expected to close in the first half of PBH’s FY27, subject to HSR clearance and other customary closing conditions.</li><li>The acquired portfolio generated ~$200 million in revenue and ~$95 million in EBITDA over the trailing 12 months ended December 31, 2025, implying an EBITDA margin of ~47.5%. </li></ul>

PBH announced the acquisition of Breathe Right® and a portfolio of complementary brands from Foundation Consumer Healthcare for $1.045 billion, or ~$900 million net of anticipated tax benefits.The transaction is expected to close in the first half of PBH’s FY27, subject to HSR clearance and other customary closing conditions.The acquired portfolio generated ~$200 million in revenue and ~$95 million in EBITDA over the trailing 12 months ended December 31, 2025, implying an EBITDA margin of ~47.5%. 

PBH: Breathe Right Acquisition Right on Point

<div><ul><li>PBH reported 2QFY26 adjusted EPS of $1.07 versus $1.09 in 2QFY25, above our $0.97 estimate, which was also FactSet consensus.</li><li>Sales in the quarter declined 3.4% Y/Y to $274.1MM, above our $256.9MM estimate, as well as consensus of $257.1MM.</li><li>Management previously expected sales in the range of $256-259MM, so sales exceeded management’s original expectations as well. </li></ul></div>

PBH reported 2QFY26 adjusted EPS of $1.07 versus $1.09 in 2QFY25, above our $0.97 estimate, which was also FactSet consensus.Sales in the quarter declined 3.4% Y/Y to $274.1MM, above our $256.9MM estimate, as well as consensus of $257.1MM.Management previously expected sales in the range of $256-259MM, so sales exceeded management’s original expectations as well. 

PBH: Demand Pull-Forward Drives 2QFY26 Upside; Raising EPS Estimates Due to Strong Free Cash Flow

Thematic (Sector/Industry)

<ul><li>The WTR Consumer Index underperformed the S&amp;P SmallCap 600 in 2025, declining 10.6% versus an increase of 4.2% for the broader index. </li><li>The 4.6% increase in prospective earnings for our index was more than offset by a 2.6x contraction in its prospective P/E ratio to 15.5x from 18.1x at the beginning of the year.</li><li>Conversely, prospective earnings for the S&amp;P SmallCap 600 declined 2.5% in 2025, but that was more than offset by a 1.1x expansion of its prospective P/E ratio to 16.7x from 15.6x at the beginning of the year.</li></ul>

The WTR Consumer Index underperformed the S&amp;P SmallCap 600 in 2025, declining 10.6% versus an increase of 4.2% for the broader index. The 4.6% increase in prospective earnings for our index was more than offset by a 2.6x contraction in its prospective P/E ratio to 15.5x from 18.1x at the beginning of the year.Conversely, prospective earnings for the S&amp;P SmallCap 600 declined 2.5% in 2025, but that was more than offset by a 1.1x expansion of its prospective P/E ratio to 16.7x from 15.6x at the beginning of the year.

Consumer Monthly : WTR Consumer Index Lags Broader Market in 2025 - 12 January 2026

United States

Prestige Brands Holdings, Inc. distributes over-the-counter healthcare and household cleaning products to retail stores in the United States, Canada and other international markets.  The Company distributes oral, eye and skin care; cough, cold, allergy and sinus; and household cleansers, sponges, scrubbers and cleaning pads.

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Prestige Brands Holdings, Inc (PBH US)

PBH: Deals Increase Sales Base by More than 20%

Sales were $265.7MM, +6.5% Y/Y, with organic sales +3.2% and the Breathe Right acquisition contributing $5.9MM or 2.4%. The pull-forward of retail...

Water Tower Research

PBH: Supply-Driven 4QFY26 Miss Obscures a Strengthening Multi-Year Story

PBH reported 4QFY26 adjusted EPS of $1.23 versus $1.32 in 4QFY25, a decline of 6.8% and below expectations. Our estimate was $1.40 and consensus...

Water Tower Research

PBH: Breathe Right Acquisition Right on Point

PBH announced the acquisition of Breathe Right® and a portfolio of complementary brands from Foundation Consumer Healthcare for $1.045 billion,...

Water Tower Research

PBH: Demand Pull-Forward Drives 2QFY26 Upside; Raising EPS Estimates Due to Strong Free Cash Flow

PBH reported 2QFY26 adjusted EPS of $1.07 versus $1.09 in 2QFY25, above our $0.97 estimate, which was also FactSet consensus.

Water Tower Research

Consumer Monthly : WTR Consumer Index Lags Broader Market in 2025 - 12 January 2026

The WTR Consumer Index underperformed the S&P SmallCap 600 in 2025, declining 10.6% versus an increase of 4.2% for the broader index.

Water Tower Research

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