EnerSys (ENS): Exploring Valuation After Steady Gains and Renewed Investor Interest

EnerSys (ENS) is back on investors' watchlists after a recent move that, while not tied to any specific news development, has sparked fresh questions about what’s next for the company. Sometimes, it’s these quieter moments that deserve the most attention, especially when the market starts shifting direction without an obvious headline. This situation can reveal as much about sentiment as a splashy announcement.

Over the past year, EnerSys shares have moved steadily higher, gaining 10% and building momentum over the past month with nearly a 9% lift. While there have not been headline-grabbing developments, steady gains and positive trends in both annual revenue and net income growth suggest that investors are reconsidering the company’s long-term potential, perhaps in response to shifting outlooks for the industrial sector. The stock continues to trade above its level from the start of the year and sits well above where it was three years ago, underscoring interest in the company’s execution even in the absence of major news.

With that in mind, is EnerSys trading at a bargain based on its fundamentals, or is the market already factoring in the next phase of growth?

Most Popular Narrative: 12.8% Undervalued

According to the most widely followed narrative, EnerSys is currently trading below its estimated fair value, with room for potential upside based on earnings and margin expansion forecasts.

Major cost-reduction initiatives, including a strategic realignment and transition to Centers of Excellence (CoEs), are expected to generate $80 million in annualized savings starting in fiscal 2026. These measures are projected to structurally expand net and operating margins. The electrification of industrial equipment (for example, forklifts and lift trucks) and automation trends are driving increased demand for maintenance-free batteries and advanced charger solutions. This positions Motive Power for a rebound in volumes and margin expansion as macro and tariff headwinds abate.

Curious about what's fueling that discounted valuation? The growth story hinges on transformative margin improvements and ambitious financial targets that set this forecast apart. What bold projections are analysts betting on, and how do they stack up against industry standards? Explore the full narrative to uncover the crucial numbers shaping this undervalued call.

Result: Fair Value of $120 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, policy uncertainty around tariffs and reliance on acquisitions rather than organic growth could quickly change the outlook if conditions worsen.

Find out about the key risks to this EnerSys narrative.

Another View: What Does Our DCF Model Suggest?

Taking a different approach, our SWS DCF model also points toward undervaluation for EnerSys. This echoes the earlier optimism but relies on its own set of assumptions about future cash flows. Could both methods be missing key risks or signals?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out EnerSys for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own EnerSys Narrative

Whether you see things differently or want to dig deeper into the numbers yourself, you can craft your own take in just a few minutes. Do it your way.

A great starting point for your EnerSys research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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