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Newell Brands' Growth Efforts on Track: Should You Add?

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Consumer goods behemoth, Newell Brands Inc.NWL seems to be progressing well buoyed by its Growth Game Plan, Project Renewal Program and solid earnings history. Driven by these attributes, this Zacks Rank #3 (Hold) stock has considerably outperformed the Zacks categorized Consumer Products - Miscellaneous Staples industry, which occupies space in the top 50% of the Zacks classified industries.

Over the past year, its shares have surged 34.4% compared with the Zacks categorized industry's gain of 7.5%. Further, it boasts a VGM Score of 'A' with a long-term earnings growth rate of 11.6%, underscoring its inherent strength.

Let's Delve Deeper

Newell Brands appears compelling from the earnings perspective. Notably, the company has recorded earnings beat in 18 of the last 20 quarters, with an average of 6.2% in the trailing four quarters. While the company posted in-line earnings of 80 cents for the fourth quarter of 2016, its sales lagged expectations. However, both the top and bottom lines surged year over year driven by gains from the recently acquired Jarden business. (Read more: Newell Q4 Earnings In Line, Sales Lag; EPS View Up )

Moreover, management raised its earnings guidance for 2017, which is now expected in the range of $2.95−$3.15 per share versus $2.85-$3.05 projected earlier. This further led an uptrend in the Zacks Consensus Estimate, which increased 3 cents to $3.04 for 2017, over the past 30 days.

Meanwhile, Newell Brand's Project Renewal Program also seems to be on track. Management intends to use a major portion of the savings to accelerate growth by investing the same in business, while the remaining cost savings are expected to reflect in earnings.

Throwing light upon the company's latest Growth Game Plan, the company announced a host of changes in a bid to strengthen its portfolio. In this regard, Newell Brands declared plans to transform itself from a holding company to an operating company with fresh investment plans and new ideas for its combined portfolio with Jarden.

Under the aforesaid Growth Game Plan, management further intends to sell about 10% of its current portfolio, including major transformation in its various segments. Additionally, it has agreed to sell the Rubbermaid consumer storage totes business and also put up a couple of businesses, including the Pine Mountain and Diamond brands, for sale.

Moreover, it concluded the recently agreed acquisition of Smith Mountain Industries. Moving ahead, the company seems to be on track with its plan of exiting product lines with annual sales in the range of $200−$300 million across its combined business with Jarden, in the next two to three years.

Despite these growth drivers, the stock is not devoid of challenges. Newell Brand'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 remains major threats to the company.

Key Picks

Investors looking for better-ranked stocks in the same industry may opt for Blue Buffalo Pet Products, Inc. BUFF , Energizer Holdings, Inc. ENR and Spectrum Brands Holdings, Inc. SPB .

Blue Buffalo Pet Products, with a long-term earnings growth rate of 14% has surged 46% in the past one year. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Energizer Holdings, a Zacks Rank #1 stock has jumped 43.6% in the past one year. Also, it has a long-term earnings growth rate of 9.5%.

Spectrum Brands carrying a Zacks Rank #2 (Buy) has grown 44.6% in the past one year. Also, it has a long-term earnings growth rate of 12%.

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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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