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Newell (NWL) on Track with Portfolio Enhancement Plans
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Consumer goods behemoth, Newell Brands Inc. (NWL - Free Report) is smoothly progressing with plans on simplifying and strengthening portfolio. Making further progress on these plans, the company completed the previously agreed acquisition of Sistema Plastics and closed the sale of the Rubbermaid consumer storage business yesterday. Additionally, the company agreed to sell its small central European Teutonia baby stroller business to a private investor.
Per the terms of the Sistema acquisition, the company has paid NZ$660 million (US$460 million) in cash for the purchase. The New Zealand-based Sistema Plastics offers exclusive food storage containers and boasts of a solid presence in Australia, New Zealand, U.K. and parts of continental Europe. Notably, it generates annual sales of about $145 million, and is one of the fastest-growing names in the Food Storage space.
This acquisition is expected to enhance Newell’s portfolio of food storage and preservation brands, which includes Rubbermaid food storage, FoodSaver vacuum seal food preservation system and Ball canning and crafting jars. This will strengthen the company’s position in this growing category. Further, Sistema’s strong global network and presence in regions where Newell doesn’t currently operate, is likely to improve geographic reach.
Coming to the sale of Rubbermaid consumer storage business, the company had agreed to sell this business to United Solutions in Jan 2017. As part of the sale agreement, the companies agreed upon a five-year licensing agreement regarding the use of the Rubbermaid brand name. Further, Newell stated that it will continue selling other Rubbermaid brand products.
Moreover, the company revealed that it is on track with the divestiture of all other assets announced under the new Growth Game Plan. Together, the proceeds from these divestitures will mainly be utilized in reducing the company’s debt. This, in turn, will take Newell closer to its leverage ratio target of 3−3.5 times EBITDA in two to three years.
Clearly, these actions reflect Newell’s focus on simplifying operating structure, alongside highlighting its commitment toward making prudent investments in areas with higher growth potential.
However, we note that shares of Newell have underperformed the Zacks categorized Consumer Products–Staples industry on a year-to-date basis. While this Zacks Rank #3 (Hold) stock yielded nearly 5.3%, the industry gained 11.3%.
Blue Buffalo Pet Products has a long-term earnings growth rate of 13%. Further, it has posted an average beat of 6.8% in the trailing four quarters.
Ollie's Bargain has to its credit a spectacular earnings trend as the company delivered a positive earnings surprise in the past four quarters. Moreover, its long-term EPS growth rate of 17.1% and positive estimate revisions in the past seven days help it stand strong against the industry.
Energizer Holdings, with a long-term earnings growth rate of 9.5%, has surged 25.1% year to date.
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Newell (NWL) on Track with Portfolio Enhancement Plans
Consumer goods behemoth, Newell Brands Inc. (NWL - Free Report) is smoothly progressing with plans on simplifying and strengthening portfolio. Making further progress on these plans, the company completed the previously agreed acquisition of Sistema Plastics and closed the sale of the Rubbermaid consumer storage business yesterday. Additionally, the company agreed to sell its small central European Teutonia baby stroller business to a private investor.
Per the terms of the Sistema acquisition, the company has paid NZ$660 million (US$460 million) in cash for the purchase. The New Zealand-based Sistema Plastics offers exclusive food storage containers and boasts of a solid presence in Australia, New Zealand, U.K. and parts of continental Europe. Notably, it generates annual sales of about $145 million, and is one of the fastest-growing names in the Food Storage space.
This acquisition is expected to enhance Newell’s portfolio of food storage and preservation brands, which includes Rubbermaid food storage, FoodSaver vacuum seal food preservation system and Ball canning and crafting jars. This will strengthen the company’s position in this growing category. Further, Sistema’s strong global network and presence in regions where Newell doesn’t currently operate, is likely to improve geographic reach.
Coming to the sale of Rubbermaid consumer storage business, the company had agreed to sell this business to United Solutions in Jan 2017. As part of the sale agreement, the companies agreed upon a five-year licensing agreement regarding the use of the Rubbermaid brand name. Further, Newell stated that it will continue selling other Rubbermaid brand products.
Moreover, the company revealed that it is on track with the divestiture of all other assets announced under the new Growth Game Plan. Together, the proceeds from these divestitures will mainly be utilized in reducing the company’s debt. This, in turn, will take Newell closer to its leverage ratio target of 3−3.5 times EBITDA in two to three years.
Clearly, these actions reflect Newell’s focus on simplifying operating structure, alongside highlighting its commitment toward making prudent investments in areas with higher growth potential.
However, we note that shares of Newell have underperformed the Zacks categorized Consumer Products–Staples industry on a year-to-date basis. While this Zacks Rank #3 (Hold) stock yielded nearly 5.3%, the industry gained 11.3%.
Key Picks
Better-ranked stocks in the same industry include Blue Buffalo Pet Products, Inc. (BUFF - Free Report) , Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) and Energizer Holdings, Inc. (ENR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Blue Buffalo Pet Products has a long-term earnings growth rate of 13%. Further, it has posted an average beat of 6.8% in the trailing four quarters.
Ollie's Bargain has to its credit a spectacular earnings trend as the company delivered a positive earnings surprise in the past four quarters. Moreover, its long-term EPS growth rate of 17.1% and positive estimate revisions in the past seven days help it stand strong against the industry.
Energizer Holdings, with a long-term earnings growth rate of 9.5%, has surged 25.1% year to date.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>