Newell Surges to a New High - Analyst Blog
December 30 2013 - 11:00AM
Zacks
The shares of Newell Rubbermaid Inc. (NWL)
soared to a new 52-week high of $32.38 on Friday, Dec 27. The
producer of Sharpie pens and Rubbermaid containers eventually
closed trade at $32.20, reflecting a solid year-to-date return of
42.4%.
Average volume of shares traded over the last 3 months stands at
approximately 1.8 million. The stock currently trades at a forward
P/E of 17.6x, at par with the peer group average.
An impressive record of posting better-than-expected bottom-line
results, solid top-line growth, margin improvement, cost
containment efforts, a favorable 2013 outlook, notable return on
equity and a reasonably healthy financial position, were the major
driving forces that led the shares of this Zacks Rank #3 (Hold)
company to the new high.
Further, the company continues to progress well with its ‘Growth
Game Plan’ strategy announced in Oct 2012, under which it has sold
its hardware and Teach Platform businesses. Under the ‘Growth Game
Plan’ strategy, the company intends to lay off approximately 10% of
the workforce, build a new organizational model as well as
leadership team.
We believe that the overall growth plan will help Newell Rubbermaid
reduce the complexities of the organization, boost customer
services and sourcing functions as well as increase investments in
the core business areas.
With respect to earnings surprises, Newell has topped the Zacks
Consensus Estimate for the past several years, with a trailing
four-quarter average surprise of 4.45%. In the last concluded
quarter, the company outdid Zacks’ expectations by 4.0%.
Newell posted outstanding bottom-line results for the third quarter
of 2013. The quarterly earnings per share of 52 cents beat the
Zacks Consensus Estimate of 50 cents as well as 47 cents earned in
the year-ago quarter. The earnings growth resulted from a better
operating performance, lower interest expenses and a favorable tax
rate.
Leveraging its strong brand equity, Newell Rubbermaid expects core
sales growth of 2%–4% and adjusted earnings in the range of
$1.80–1.84 per share for fiscal 2013.
Further, we believe that Newell’s Project Renewal program will help
reduce operating costs and the complexities of the organization,
while increasing investments in the most important growth areas
within the business. The company is expected to be saving a
cumulative $270–$325 million annually by the second quarter of
fiscal 2015.
Other stocks in the retail space that touched all-time highs on the
same trading day are V.F. Corp. (VFC),
Archer Daniels Midland Company (ADM) and
The Walt Disney Company (DIS), which reached
$62.48, $43.96 and $74.78, respectively.
ARCHER DANIELS (ADM): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
NEWELL RUBBERMD (NWL): Free Stock Analysis Report
V F CORP (VFC): Free Stock Analysis Report
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