Maintaining Prestige's Fair Value

After reviewing Prestige Brands Holdings' PBH second-quarter results and speaking to management, we are maintaining our fair value estimate. There are much stronger consumer product firms around, but Prestige continues to generate consistent cash flows and the stock is looking cheap. We believe our valuation reflects realistic expectations for the company over the next five years, including modest top- and bottom-line growth. Given that it's a no-moat, above-average-risk company, however, we wouldn't be too wedded to Prestige should the stock price recover and approach our valuation. This isn't a candidate for a long-term position, in our view.