Why Shares of Spectrum Brands Are Up 10% After Missing on the Bottom Line

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What happened?

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Shares of Spectrum Brands Holdings, Inc. (NYSE: SPB), a leading supplier of batteries, appliances, hardware, and home-improvement products, among other product segments, are spiking 10% as of 3 p.m. EST on Thursday. This comes after the company posted a solid fourth quarter, despite missing profit estimates.

So what

Spectrum recorded revenue of $1.32 billion during the fourth quarter, topping Wall Street estimates calling for $1.3 billion. But the top-line beat wouldn't filter to the company's bottom line, as its adjusted earnings per share checked in at $1.35, below analysts' estimates calling for $1.46 per share.

However, there were enough bright spots in the data that investors were able to shrug off the bottom-line miss. One such bright spot: Organic sales grew 3.1% during the quarter, net of acquisitions and currency impacts. Organic adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) grew 5%, with margin increasing 50 basis points to 19.5%. Arguably the brightest spot was the company's e-commerce, which jumped 50% in its core U.S. market.

Now what

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"We finished a challenging fiscal 2017 with a strong fourth quarter performance," said Andreas Rouve, CEO of Spectrum Brands Holdings, in a press release. "Our Home & Garden and Hardware & Home Improvement businesses led the way with record quarterly results, and Global Auto Care and Personal Care delivered solid performances as well. Regionally, growth was driven by our core U.S. business along with strong expansion in our European and Asia-Pacific regions."

With 2017 ending on a strong note, management hopes to maintain the momentum by launching two initiatives: Projects Alpha and Ignite. Project Alpha will spend an additional $20 million to further accelerate organic sales, and Project Ignite is a companywide initiative designed to better adapt its products to constantly evolving consumer preferences. If those two projects can help Spectrum grow organic sales, 2018 should start off on a similar note for investors.

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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.