The shares of Newell Rubbermaid Inc. (NWL - Analyst Report) 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 - Analyst Report), Archer Daniels Midland Company (ADM - Analyst Report) and The Walt Disney Company (DIS - Analyst Report), which reached $62.48, $43.96 and $74.78, respectively.