Helen of Troy Limited (HELE): A Bull Case Theory
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Helen of Troy (HELE), owner of steady cash-generating consumer brands like OXO, Hydro Flask, Braun, and Osprey, is trading at just 3.5x adjusted P/E—an irrationally low valuation given the company's underlying fundamentals. Much of this dislocation stems from overblown tariff fears, misunderstood one-time charges like the non-cash Drybar impairment, and temporary headwinds such as lower-margin sales post-COVID.
The company is addressing these issues through Project Pegasus, a multi-year cost-saving initiative expected to deliver $75–85 million annually by 2027, while also reducing its China exposure below 20% of COGS by 2026. Beauty and wellness brands are rebounding, with Olive & June growing 8.7% in Q4, and Drybar's restructuring now complete. At the same time, HELE's $7.17 FY25 EPS and modest leverage (net debt/EBITDA ~3x with 4x interest coverage) highlight its financial resilience.
While the stock was overvalued during the COVID bull run, trading at nearly 30x earnings in December 2021 due to a temporary boost in household items, the nearly 90% decline since then has been largely due to multiple contractions, not a fundamental collapse. Revenue has declined slightly from $2.1B in 2021 to a projected $1.9B in FY2025, but book value has grown by about 40%, showing the business isn't burning cash.
Now trading below book value, HELE is a traditional, cash-generative business with recession-resistant brands that offer stability. With a base-case 50–100% upside and private equity interest a plausible catalyst, this is a classic value play with limited downside and significant rerating potential as execution continues.
Previously, we have covered a bullish thesis on On Holding AG (ONON) in October 2024, written by Sanjiv on Substack, which, like Helen of Troy (HELE), operates in the consumer space with strong brand equity and margin expansion potential. While ONON represents a premium growth story and HELE a classic value opportunity, both showcase how differentiated brands can thrive despite broader market pressures.
Helen of Troy Limited (HELE) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held HELE at the end of the first quarter which was 28 in the previous quarter. While we acknowledge the risk and potential of HELE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published at Insider Monkey.
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Helen Of Troy Ltd (HELE) Q1 2026 Earnings Call Highlights: Navigating Challenges with Strategic ...
Consolidated Net Sales: Decreased 10.8% year-over-year. Organic Net Sales: Decreased by 17.3% excluding Olive and June. Gross Profit Margin: Decreased 160 basis points to 47.1%. SG&A Ratio: Increased 420 basis points. GAAP Operating Loss: $407 million, primarily due to noncash impairment charges. Adjusted Operating Margin: Decreased 600 basis points to 4.3%. Non-GAAP Adjusted EPS: $0.40 compared to $0.99 in the same period last year. Free Cash Flow: $45 million compared to $16 million last year. Inventory Balance: $484 million, approximately $40 million higher than last year. Total Debt: $871 million, a sequential decrease of $46 million. Net Debt Ratio: Just over 3.1 times. Home & Outdoor Net Sales Decline: 10.3% with 6.7 percentage points due to tariff-related disruption. Beauty & Wellness Net Sales Decline: 11.3% with 9.7 percentage points due to tariff-related disruption. Osprey Revenue Growth: 3.7% with point-of-sale growth of 3.8%. Curlsmith Revenue Growth: 17%. Olive and June Revenue: Incremental revenue of $26.8 million. Warning! GuruFocus has detected 7 Warning Signs with HELE. Release Date: July 10, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Helen Of Troy Ltd (NASDAQ:HELE) is focusing on five key priorities to rebuild its platform for profitable growth, including restoring confidence within the organization and improving go-to-market effectiveness. The company is seeing positive underlying improvements, such as US point-of-sale unit growth in 8 out of 11 key brands and strong category growth in areas like prestige hair liquids and air purifiers. Helen Of Troy Ltd (NASDAQ:HELE) reported strong free cash flow of $45 million compared to $16 million in the same period last year. The company is making significant progress on tariff mitigation plans, including building out Southeast Asia sourcing capabilities and implementing strategic price increases. Helen Of Troy Ltd (NASDAQ:HELE) is expanding distribution for brands like Hydro Flask and Osprey in the EMEA and Asia Pacific regions, indicating growth potential in international markets. Q1 results were well below expectations, with a 10.8% consolidated revenue decline, primarily due to tariff-related disruptions. The company is experiencing consumer trade-down behavior, with average price compression of 3% to 4% in the US business, impacting revenue and profitability. Tariff-related impacts are expected to persist into the second quarter, contributing to continued revenue challenges. Helen Of Troy Ltd (NASDAQ:HELE) is not providing a full-year outlook due to ongoing uncertainty related to tariffs and their potential impact on revenue and costs. The company is facing broader demand softness across categories, driven by shifts in consumer behavior and economic uncertainty, leading to cautious retailer ordering patterns. Q: Can you provide more details on your pricing strategy and how you are considering elasticity in the current environment? A: Brian Grass, Interim CEO: We are implementing average price increases across our portfolio ranging from 7% to 10%, with individual product increases varying from 0% to 15%. We are making conservative elasticity assumptions due to the challenging environment. Tracy Scheuerman, Interim CFO, added that pricing is selective by brand, considering the category's nature and country of origin. Q: How should we think about the long-term earnings power of the business given the current challenges? A: Brian Grass, Interim CEO: The first half of the fiscal year is heavily impacted by tariffs, but we expect improvements in the second half due to pricing actions and other mitigations. The existing consensus estimate for the full year is not unreasonable, but the cadence of results will differ, with more headwinds in the first half and tailwinds in the second half. 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