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Newell (NWL) to Report Q2 Earnings: Is a Surprise in Store?
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Newell Brands Inc. (NWL - Free Report) is slated to report second-quarter 2016 results on Jul 29, before the opening bell. In the last quarter, the company delivered a positive earnings surprise of 11.1%.
Additionally, Newell Brands has outperformed the Zacks Consensus Estimate by an average of 4% over the past four quarters, with a positive surprise in three of these and in line earnings in one. Let’s see how things are shaping up for this announcement.
Newell Brands has been gaining strength from splendid brand performance along with benefits from the Project Renewal program, which has been leading to persistent cost savings. Further, Newell’s practice of strengthening its portfolio through strategic acquisitions and reducing activities with marginal profitability bodes well.
Encouraged by its solid business trends and completion of the Jarden acquisition, the company issued an impressive outlook for 2016. It expects core sales growth of 3–4% for 2016, including standalone Newell Rubbermaid core sales growth of 4–5% and Jarden core sales growth of 2–4%. Normalized earnings per share are expected in the range of $2.75–$2.90.
However, the company’s earnings continue to be hurt by adverse currency movements, given its significant global presence. Thus, we would wait and see what is in store for Newell in the upcoming release.
Earnings Whispers
Our proven model does not conclusively show that Newell is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Newell is currently pegged at -2.74%. This is because the Most Accurate estimate of 71 cents is below the Zacks Consensus Estimate of 73 cents.
Zacks Rank: Newell carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of -2.74% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
DICK’s Sporting Goods Inc. (DKS - Free Report) , expected to release earnings on Aug 16, 2016, has an Earnings ESP of +5.97% and a Zacks Rank #3.
L Brands Inc. , scheduled to release earnings on Aug 17, 2016 has an Earnings ESP of +8.93% and a Zacks Rank #3.
The Gap Inc. (GPS - Free Report) , expected to release earnings on Aug 18, 2016, has an Earnings ESP of +2.13% and a Zacks Rank #3.
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Newell (NWL) to Report Q2 Earnings: Is a Surprise in Store?
Newell Brands Inc. (NWL - Free Report) is slated to report second-quarter 2016 results on Jul 29, before the opening bell. In the last quarter, the company delivered a positive earnings surprise of 11.1%.
Additionally, Newell Brands has outperformed the Zacks Consensus Estimate by an average of 4% over the past four quarters, with a positive surprise in three of these and in line earnings in one. Let’s see how things are shaping up for this announcement.
NEWELL BRANDS Price and EPS Surprise
NEWELL BRANDS Price and EPS Surprise | NEWELL BRANDS Quote
Factors Influencing this Quarter
Newell Brands has been gaining strength from splendid brand performance along with benefits from the Project Renewal program, which has been leading to persistent cost savings. Further, Newell’s practice of strengthening its portfolio through strategic acquisitions and reducing activities with marginal profitability bodes well.
Encouraged by its solid business trends and completion of the Jarden acquisition, the company issued an impressive outlook for 2016. It expects core sales growth of 3–4% for 2016, including standalone Newell Rubbermaid core sales growth of 4–5% and Jarden core sales growth of 2–4%. Normalized earnings per share are expected in the range of $2.75–$2.90.
However, the company’s earnings continue to be hurt by adverse currency movements, given its significant global presence. Thus, we would wait and see what is in store for Newell in the upcoming release.
Earnings Whispers
Our proven model does not conclusively show that Newell is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Newell is currently pegged at -2.74%. This is because the Most Accurate estimate of 71 cents is below the Zacks Consensus Estimate of 73 cents.
Zacks Rank: Newell carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of -2.74% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
DICK’s Sporting Goods Inc. (DKS - Free Report) , expected to release earnings on Aug 16, 2016, has an Earnings ESP of +5.97% and a Zacks Rank #3.
L Brands Inc. , scheduled to release earnings on Aug 17, 2016 has an Earnings ESP of +8.93% and a Zacks Rank #3.
The Gap Inc. (GPS - Free Report) , expected to release earnings on Aug 18, 2016, has an Earnings ESP of +2.13% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>