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Newell Rubbermaid Inc. (NWL - Analyst Report), the producer of Sharpie pens and Rubbermaid containers, remains on our Neutral list as the company continues to post robust quarterly results, impressive fiscal 2013 forecasts and continues to grow through its ongoing Project Renewal program. However, we remain concerned regarding the increasing material costs, intense competition and slowdown in housing and remodeling market.

Why Reiterate?

Fourth-quarter 2012 earnings of 43 cents per share at Newell exhibited an improvement of 7.5% from the comparable year-ago quarter as well as the Zacks Consensus Estimate of 42 cents. Earnings gained mainly from the positive impact of pricing and productivity and lower structural selling, general and administrative expenses as a percentage of sales, partially offset by higher input cost inflation.

It is to be noted that the company has a history of beating Zacks Consensus numbers. The company has consistently posted positive surprises in the past several quarters. The average positive surprise in the trailing four quarters comes to 5.02%.

Buoyed by strong quarterly results, management now anticipates core sales growth of 2%–4% and adjusted earnings in the range of $1.78–$1.84 per share for fiscal 2013. Moreover, Newell expects a 20 basis points improvement in operating margin during fiscal 2013.

Further, we believe that Newell’s Project Renewal program will help it reduce operating costs and complexity of the organization, while also increase investments in the most important growth areas within the business. It is expected that the company will be saving a cumulative $270–$325 million annually from the middle of 2015.

On the flip side, the company operates in a competitive environment and strives to maintain its market share, actively competing with numerous manufacturers and distributors of consumer and commercial products. The company’s primary traits to compete in the environment include focus on pricing, big consumer brands, introduction of new products, and customer service.

While our recommendation on Newell rides on the various positives mentioned above, soft economic recovery, threats of competition and foreign currency translation, keep us on the side lines. The company retains a Zacks Rank #3 (Hold).

Other Stocks Worth Considering

Other stocks worth considering in the housewares and accessories industry are Avery Dennison Corporation (AVY - Analyst Report), Jarden Corporation (JAH - Snapshot Report) and Tupperware Brands Corporation (TUP - Snapshot Report). Avery has a Zacks Rank #1 (Strong Buy) while Jarden and Tupperware carry a Zacks Rank #2 (Buy). The stocks are expected to continue with their upbeat performance and sustain their positive earnings surprise trend.

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