Newell Hits 52-Week High on Q2 Earnings, Growth Plans - Analyst Blog

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Shares of Newell Rubbermaid Inc. ( NWL ) 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 growth prospects.

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 deal.

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. ( SKX ), Avis Budget Group, Inc. ( CAR ) and Archer Daniels Midland Company ( ADM ) also hit 52-week highs of $56.89, $63.38 and $50.00, respectively, on Aug 11, 2014.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: NWL , ADM , CAR , SKX

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