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Analyst Blog

Newell Rubbermaid Inc. (NWL - Analyst Report) is set to declare second-quarter 2013 results on Jul 26. In the last quarter, the company’s adjusted earnings surpassed the Zacks Consensus Estimate by 9.4%. Let us now look at how things have developed for the imminent announcement.

Growth Factors in the Past Quarter

The year-over-year earnings growth resulted from a better operating performance, lower interest expenses and a favorable tax rate. The company’s strong brand portfolio, capital deployment strategy and Project Renewal Program also facilitated the company to post better-than-expected results.

Earnings Whispers?

Our proven model does not conclusively project that Newell Rubbermaid is likely to beat earnings estimate this quarter. A stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
 
Zacks ESP:
ESP for Newell Rubbermaid is 0.00% since the Most Accurate Estimate stands at 49 cents, which is in line with the Zacks Consensus Estimate.

Zacks #2 Rank (Buy): Newell Rubbermaid’s Zacks Rank #2 (Buy) lowers the predictive power of ESP because the Zacks Rank #2 when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Newell Rubbermaid is not the only firm we are looking up to this earnings season. Our model shows that the following stocks have the right combination of elements to post an earnings beat this quarter:

The Gap, Inc. (GPS - Analyst Report) has an Earnings ESP of +1.70% and a Zacks Rank #2 (Buy).

Five Below, Inc. (FIVE - Snapshot Report) has an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).

Deckers Outdoor Corp. (DECK - Analyst Report) has an Earnings ESP of +6.60% and a Zacks Rank #3 (Hold).

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