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Newell (NWL) Sells Assets in Sync With Transformation Plan

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Newell Brands Inc. (NWL - Free Report) is smoothly progressing with its Accelerated Transformation Plan, focused on creating a simpler, faster and stronger consumer-focused portfolio of leading brands. In sync with the plan, the company completed the previously announced the sale of The Waddington Group and Rawlings Sporting Goods Company, Inc., for gross proceeds of $2.7 billion. The company received $2.5 billion net of taxes. Proceeds from the sale of these assets will be directed to lower balance sheet debt as well as for share repurchases.

The company agreed to divest the packaging maker, The Waddington Group, to Novolex for roughly $2.3 billion in May 2018. The sale includes brands like Eco-Products, POLAR PAK, WNA and other industry-leading brands.

Further, in June, the company entered a pact, with a fund managed by Seidler Equity Partners (“SEP”), to sell its sporting goods subsidiary, Rawlings Sporting Goods Company, Inc. The private investment firm has partnered with Major League Baseball (“MLB”) for the transaction. The sale includes Rawlings, Miken and Worth brands. Newell Brands will receive gross proceeds of nearly $395 million from the transaction. Further, after-tax proceeds from the sale are expected to be about $340 million.

Moreover, Newell is looking for options for the Jostens and Pure Fishing brands. The key aspects of the Transformation Plan are restructuring the company into a global consumer product entity, valued at more than $9 billion, along with major brands in seven consumer segments.  In doing so, the company plans to offload non-core businesses that account for nearly 35% of the company’s sales, utilize $10 billion after-tax proceeds from divestitures and a free cash flow to lower debt plus make share repurchase as well as retaining investment grade rating and an annual dividend of 92 cents per share through 2019, targeting 30-35% payout ratio.

The above-mentioned plan will likely generate net sales of above $9 billion, boosting shareholder value and financial flexibility. Newell progresses well with its divestiture operations and anticipates the same to be completed by the end of 2019. Thereafter, management projects sales of roughly $9.5 billion, with normalized operating margin expansion of more than 15% by 2020.

Shares of the company did not react much to the news. However, this Zacks Rank #3 (Hold) stock has surged 11.1% in the past month, outperforming the industry’s increase of 4.5%.



3 Top-Ranked Consumer Staples Stocks

Some better-ranked stocks in the Consumer Staples sector include Turning Point Brands, Inc. (TPB - Free Report) and Medifast, Inc. (MED - Free Report) , both sporting a Zacks Rank #1 (Strong Buy) as well as Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Turning Point Brands has rallied 61.9% in the last three months. Additionally, the company has delivered positive earnings surprise of nearly 16.7% in the last reported quarter.

Medifast has surged 74.3% in the last three months. Moreover, the company has long-term earnings growth rate of 15%.

Ollie's Bargain has delivered an average positive earnings surprise of 9% in the trailing four quarters. It has long-term earnings growth rate of 23%.

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