Back to top

Analyst Blog

Shares of Newell Rubbermaid Inc. (NWL - Analyst Report) soared to a new 52-week high of $26.11 on Thursday, Mar 28, 2013. The closing price of the producer of Sharpie pens and Rubbermaid containers as on Mar 28 was $26.10, which represented a solid return of 45.2% over the past one year. Average volume of shares traded over the last 3 months stands at approximately 2.986 million. Moreover, the stock currently trades at a forward P/E of 14.3x, at par with the peer group average.

An impressive record of posting better-than-expected bottom-line results, solid top-line  growth, margin improvement, a favorable 2013 outlook, notable return on equity and a reasonably healthy financial position, are the major factors that drove the shares of this Zacks Rank #3 (Hold) company to a new high.

With respect to earnings surprises, Newell has topped the Zacks Consensus Estimates for the past several years, with a trailing four-quarter average surprise of 5.0%. At the same time, an impressive return on equity compared to its peers acts as a catalyst for the stock. It has a 12-month ROE of 24.9%, which is above its peer group average of 21.9%.

In February, the company reported adjusted earnings of 43 cents per share for the fourth quarter of 2012, marginally beating the Zacks Consensus Estimate of 42 cents and year-ago quarter earnings of 40 cents. The earnings growth was a result of the positive impact from pricing and productivity and lower structural selling as well as general and administrative expenses as a percentage of sales.

Net sales inched up 1.6% to $1,518.8 million, surpassing the Zacks Consensus Estimate of $1,514.0 million.

Newell’s quarterly gross profit marginally inched down 0.3% year over year to $555.0 million, while gross margin contracted 70 basis points to 36.5% primarily due to increased investments related to fourth-quarter events. Operating income increased 22.5% year over year to $153.8 million, while operating margin expanded 170 basis points to 10.1%.

Concurrently, the company provided outlook for 2013. Management anticipates core sales growth of 2%–4% and adjusted earnings in the range of $1.78–$1.84 per share for 2013. Moreover, Newell expects an improvement of 20 basis points in operating margin during 2013.

The company expects to achieve its targeted annualized cost savings of $270–$325 million by the second quarter of 2015 through its Project Renewal program. Moreover, Newell will be saving costs between $90 million and $100 million through its Project Renewal program in the first half of 2013.

Besides Newell, other stocks in the retail space that touched all-time highs in the recent weeks are The Clorox Company (CLX - Analyst Report), Colgate-Palmolive Co. (CL - Analyst Report) and Campbell Soup Company (CPB - Analyst Report).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%