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Can Newell's (NWL) Growth Game Plan Continue to Drive Stock? (revised)

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Newell Brands Inc.NWL has been pulling focus thanks to its numerous moves associated with its growth game plan. The company announced a host of amendments when it unveiled the plan in Oct 2016. These changes reflect Newell's focus on simplifying its operating structure, alongside highlighting its commitment toward prudent investments in areas with higher growth potential.

Well, Newell is leaving no stone unturned with regard to simplifying its operating structure and moving toward its goal of selling about 10% of its portfolio. Incidentally, last week, this consumer goods behemoth inked a deal to divest its Winter Sports businesses to Kohlberg & Company, L.L.C. for roughly $240 million. Anticipated to close in late second or early third quarter of 2017, the deal will include the sale of Volkl, K2, Marker, Dalbello, Madshus, Line, Full Tilt, Atlas, Tubbs, Ride and BCA businesses.

Prior to this, Newell undertook many other acquisitions and divestitures, in line with it growth game plan. These include sale of Newell's Tools business, deal to sell Rubbermaid consumer storage totes business, and its buyout of Smith Mountain Industries. Also, the company recently completed the acquisition of the Sistema Plastics business, and entered into a definitive agreement to sell its Pine Mountain® fire starters and fire logs business as well as its Diamond® matches, fire starters, lighters, toothpicks, clothespins and clotheslines business to Royal Oak Enterprises LLC, a leading manufacturer of charcoal and grilling products.

Apart from this, Newell's stock also received considerable boost from its superb earnings history. Notably, the company hasn't missed earnings estimates for almost seven years now. Further, in the first quarter of 2017, both top and bottom lines surpassed estimates. Results gained from core sales growth across all regions and in most segments, Project Renewal savings, cost synergies from Jarden and gain on sale of Newell's Tools business.

The robust results and confidence in future prospects also called for a 21% dividend hike and raised earnings outlook for 2017. This was well-received by investors and analysts, as Newell's shares have increased nearly 15% since the splendid outcome. Also, the Zacks Consensus Estimate for 2017 has improved from $3.04 to $3.11, in the last 30 days. In the last three months, this Zacks Rank #3 (Hold) stock has increased 8%, surpassing the Zacks categorized Consumer Products - Miscellaneous Staples industry's growth of 0.9%.

However, the company's significant global presence exposes it to currency woes, and any further prevalence of these headwinds in the future is likely to hurt results. Moreover, intense competition and volatile consumer behavior remain the major threats, given its consumer-focused nature.

All said, will Newell's growth game plan and strong performance sustain its momentum amid a tough consumer landscape? Let's wait and watch.

Until then, investors can count on some better-ranked stocks in the same space. These include Energizer Holdings, Inc. ENR , Ollie's Bargain Outlet Holdings, Inc. OLLI and Tupperware Brands Corp. TUP , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.

Ollie's Bargain has to its credit a spectacular earnings history and long-term EPS growth rate of 17.1%.

Energizer, with a long-term EPS growth rate of 9.8%, delivered an average positive earnings surprise of 21.6% in the past four quarters.

Tupperware, with a long-term EPS growth rate of 12%, delivered an average positive surprise of 6.7% in the trailing four quarters.

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(We are reissuing this article to correct a mistake. The original article, issued Wednesday, May 31, 2017, should no longer be relied upon.)

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Newell Brands Inc. (NWL): Free Stock Analysis Report

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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 Nasdaq, Inc.


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

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