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Can Newell (NWL) Continue its Growth Story Amid Hurdles?

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Newell Brands Inc. (NWL - Free Report) at present is likely to draw investors’ attention. While shares of this consumer goods company have risen only 2.8% over the past one year, it fares much better than the Zacks categorized Consumer Products – Miscellaneous Staples industry, which declined 5.4%. This outperformance, along with Newell’s long-term earnings growth rate of 12.5% and solid fundamentals, positions it well for the future.
 



That said, let’s see what’s been driving this Zacks Rank #3 (Hold) stock. Newell Brands has mainly been riding on its latest Growth Game Plan, ongoing Project Renewal Program, solid acquisitions and impressive earnings history.

Starting with Newell’s latest Growth Game Plan, the company declared plans to transform into an operating company from a holding company – with fresh investment plans and new ideas for its combined portfolio with Jarden.

In this regard, the company announced to sell nearly 10% of its current portfolio, including a major chunk of its Tools segment. Thereafter, the company will align its resources to more profitable areas like Writing, Home Fragrance, Baby, Food Storage & Preparation, Appliances & Cookware, and Outdoor & Recreation. This, in turn, is likely to shape the company for a better future with stronger prospects.

Progressing on these lines, the company inked a definite deal to sell its Irwin, Lenox and Hilmor brands of the Tools segment, to Stanley Black & Decker Inc. (SWK - Free Report) . Conversely, the company inked deals to acquire Sistema Plastics and Smith Mountain Industries, thereby making attempts to solidify its portfolio.

Moreover, Newell’s Project Renewal Program remains on track and the company achieved savings of nearly $395 million through first-quarter end. Moving ahead, the company expects annual cost savings from this program to reach nearly $700 million by 2017 end or 2018 beginning. Management plans to utilize major part of the savings to accelerate business growth and the balance is expected to reflect in the earnings.

Backed by these strategic endeavors, Newell has been delivering positive earnings surprises for three straight quarters now. Also, following its splendid third-quarter 2016 results, management raised the lower end of its core sales and adjusted earnings guidance for 2016.

However, significant global presence exposes Newell to foreign currency headwinds, thus posing concerns. Further, macroeconomic uncertainty, competitive pressure and volatile consumer behavior remain major challenges.

While we believe that the aforementioned factors are likely to help Newell counter these obstacles and continue with its growth story, let’s wait and see what future has in store for this consumer goods behemoth.

Stocks to Consider

Investors can count on better-ranked consumer staples stocks like Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) , with a Zacks Rank #1 (Strong Buy) and Edgewell Personal Care Company (EPC - Free Report) , with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ollie's Bargain has to its credit a spectacular earnings trend as the company delivered a positive earnings surprise over the past four quarters. Moreover, its long-term earnings per share (EPS) growth rate of 18.9% and positive estimate revisions over the past 30 days help it stand strong against the industry.

Edgewell Personal Care, with a long-term EPS growth rate of 8.1%, has an average positive earnings surprise of 0.5% over the trailing four quarters.

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