Newell Rubbermaid Inc.
) touched a 52-week high of $33.64 yesterday, before eventually
closing at $33.50 and amassing a year-to-date return of 5.2%.
The Zacks Rank #2 (Buy) global consumer goods marketer has been
gaining traction ever since it released its second-quarter 2014
earnings, which beat estimates backed by higher sales volume and
enhanced gross margin. The company's shares have climbed 3.1% to
date, since the earnings release.
Newell's quarterly adjusted earnings of 59 cents a share surpassed
the Zacks Consensus Estimate of 54 cents, and surged 18% year over
year. On an average, the company has delivered a positive earnings
surprise of 6.1% over the past 14 quarters, reflecting its strong
Also, net sales rose 3.1% to $1,521 million from the year-ago
quarter and came ahead of the Zacks Consensus Estimate of $1,500
million. Core sales, excluding a negative impact of 150 basis
points (bps) from foreign currency translation, climbed 4.6%,
reflecting solid sales performance across Writing, Tools and
Commercial Products segments.
Buoyed by this spectacular performance, management reiterated its
full-year outlook and made adjusted earnings projection of
$1.94-$2.00 per share. Moreover, the company finds its targeted
annualized cost savings of $270-$325 million by the second quarter
of 2015 attainable through its Project Renewal program.
These positive factors make investors constructive on the company's
performance, providing impetus to its stock.
Further, the company recently announced that it penned a deal to
acquire Ignite Holdings, LLC ("Ignite") from private equity firm
North Castle Partner. The deal, which is anticipated to close by
the end of the third quarter of the current fiscal, fits perfectly
into Newell's Growth Game Plan as Ignite's operations are focused
on product performance, design and sustained innovations.
Newell aims to leverage Ignite's current robust momentum, in
enhancing its distribution network, product expansion and
geographic presence. The proposed acquisition of Ignite and the
subsequent implementation of these strategies is likely to augment
Newell's growth rate, its normalized earnings per share as well as
its normalized operating income margin within the first year of the
Also, the company's estimated long-term EPS growth rate is an
impressive 9.9%, instilling further confidence among investors.
Newell's last traded price is also 9.2% below the Zacks Consensus
average analyst price target of $36.90, indicating an upside
potential for the stock.
Apart from Newell, Skechers USA Inc. (
), Avis Budget Group, Inc. (
) and Archer Daniels Midland Company (
) also hit 52-week highs of $56.89, $63.38 and $50.00,
respectively, on Aug 11, 2014.
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