Newell Rubbermaid Inc.
), the producer of Sharpie pens and Rubbermaid containers, posted
second-quarter 2014 adjusted earnings of 59 cents a share that
surpassed the Zacks Consensus Estimate of 54 cents, and rose 18%
year over year. The increase in the bottom line was due to higher
sales volume, increase in gross margin and reduced share count.
Newell Rubbermaid Inc - Earnings Surprise |
On a reported basis, including one-time items, the company
reported earnings of 54 cents per share, up 45.9% from the
This Zacks Rank #2 (Buy) stock's 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.
Writing net sales rose 5.2% to $502.6 million, while core sales
increased 8.9%; Tools segment net sales surged 12.3% to $222.3
million, whereas core sales grew 12.9%; and Commercial Products net
sales jumped 9.8% to $223.5 million, while core sales grew 9.9%.
However, these were partially offset by a decline of 2.6% in Home
Solutions net sales of $388.9 million (1.8% fall in core
Newell's gross profit increased 4.4% year over year to $608.4
million, whereas gross margin expanded 50 bps to 40%. Adjusted
gross margin increased 80 bps to 40.3% owing to improved
productivity and pricing, partly offset by cost inflation.
Adjusted operating income increased 9.2% year over year to
$239.8 million while operating margin improved 90 bps to 15.8%.
Other Financial Details
Newell ended the quarter with cash and cash equivalents of
$142.7 million, long-term debt of $1,424.2 million, and
shareholders' equity of $2,103.6 million.
During the first-half of 2014, the company generated operating
cash flow of $4.1 million, incurred capital expenditures of $67
million and paid dividend of $89.8 million. During the quarter, the
company bought back 3.9 million shares at $114.3 million.
The company reiterated its full-year adjusted earnings
projection of $1.94-$2.00 per share. The company's 2014 adjusted
earnings forecast excludes $100-$120 million expenses related to
Project Renewal restructuring and other restructuring activities.
The current Zacks Consensus Estimate for 2014 is $1.97.
Further, Newell continues to anticipate core sales growth of
3-4% and an improvement of up to 40 bps in the operating margin for
Newell expects to generate operating cash flow in the range of
$600-$650 million in 2014, with planned capital expenditures
between $150 million and $175 million.
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.
The initiative will be funded by savings generated through
reduction of structural selling as well as general and
administrative expenses. The Project Renewal scheme will enable the
company to reduce the complexities of the organization, while
increasing investments in the most important growth areas within
Other Stocks to Consider
Other stocks that warrant a look in the retail space include
Citi Trends, Inc. (
), Abercrombie & Fitch Co. (
) and Zumiez, Inc. (
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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