We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Newell Brands (NWL) Divests Home & Security Unit to Resideo
Read MoreHide Full Article
Newell Brands Inc. (NWL - Free Report) completed the divestment of the Connected Home & Security business (“CH&S”) to Resideo Technologies, Inc. (REZI - Free Report) in a deal worth $593 million. Being a global provider of home security solutions as well as a distributor of commercial and residential security, Resideo will gain from CH&S’ wide portfolio of smoke alarms, carbon monoxide (“CO”) alarms, connected fire and CO devices, fire extinguishers, fire suppressants, and other home safety solutions. These products are sold under the BRK, Onelink and First Alert brands.
In 2021, the CH&S business raked in sales of approximately $395 million. Notably, the addition of the First Alert brand is anticipated to complement REZI’s prevalent sensor solutions offering. Also, First Alert’s distribution channel, experienced workforce, and robust e-commerce and retail businesses will be accretive.
The net proceeds from this sale are likely to be used to reduce Newell Brand’s debt and fund share repurchases to maintain its current leverage ratio. Keeping in these lines, NWL has announced a $375-million share repurchase program, effective immediately. The divestiture move will also help Newell Brands to focus on core categories. However, the divestment is expected to have a neutral impact on the company’s normalized earnings per share in 2022.
What’s More?
Newell Brand has been gaining from solid demand, product innovation and robust core sales growth. In fourth-quarter 2021, net sales grew 4.3% year over year, driven by core sales growth of 5.8%, as six of the eight business units and each key region witnessed higher core sales. This marked the sixth successive quarter of core sales growth. On a two-year basis, core sales witnessed growth in every business unit.
This Zacks Rank #3 (Hold) company is witnessing continued online strength, backed by the buy online and pick up in stores, and ship from store services. As a result, the e-commerce business witnessed low-double-digit sales growth, accounting for nearly 22% of total sales in 2021.
Healthy consumption trends in the United States also bode well. Domestic consumption increased across all eight business categories of the company on a two-year basis, with double-digit growth in Writing, Food, Baby, Commercial, Home Appliances and Home Fragrances in the fourth quarter.
Driven by the above-mentioned factors, management issued the guidance for the first quarter and 2022. The company anticipates net sales of $9.93-$10.13 billion for 2022, with core sales of flat to up 2%. The normalized operating margin is expected to be 11.5-11.8%. Normalized earnings per share are estimated to be $1.85-$1.93 for 2022.
For the first quarter, net sales are envisioned to be $2.25-$2.30 billion, with core sales growth of 2-4%. For the quarter, the company expects a normalized operating margin of 8.9-9.3% and normalized earnings of 26-28 cents per share.
Image Source: Zacks Investment Research
Although shares of NWL have lost 1.1% year to date, they came ahead of the industry’s decline of 14%.
The Zacks Consensus Estimate for Flower Foods’ current financial-year sales and earnings suggests growth of 7.2% and 4%, respectively, from the year-ago period’s reported figures. FLO has a trailing four-quarter earnings surprise of 9%, on average.
McCormick is one of the leading manufacturers, marketers and distributors of spices, seasonings, specialty foods and flavors. It also currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Newell Brands (NWL) Divests Home & Security Unit to Resideo
Newell Brands Inc. (NWL - Free Report) completed the divestment of the Connected Home & Security business (“CH&S”) to Resideo Technologies, Inc. (REZI - Free Report) in a deal worth $593 million. Being a global provider of home security solutions as well as a distributor of commercial and residential security, Resideo will gain from CH&S’ wide portfolio of smoke alarms, carbon monoxide (“CO”) alarms, connected fire and CO devices, fire extinguishers, fire suppressants, and other home safety solutions. These products are sold under the BRK, Onelink and First Alert brands.
In 2021, the CH&S business raked in sales of approximately $395 million. Notably, the addition of the First Alert brand is anticipated to complement REZI’s prevalent sensor solutions offering. Also, First Alert’s distribution channel, experienced workforce, and robust e-commerce and retail businesses will be accretive.
The net proceeds from this sale are likely to be used to reduce Newell Brand’s debt and fund share repurchases to maintain its current leverage ratio. Keeping in these lines, NWL has announced a $375-million share repurchase program, effective immediately. The divestiture move will also help Newell Brands to focus on core categories. However, the divestment is expected to have a neutral impact on the company’s normalized earnings per share in 2022.
What’s More?
Newell Brand has been gaining from solid demand, product innovation and robust core sales growth. In fourth-quarter 2021, net sales grew 4.3% year over year, driven by core sales growth of 5.8%, as six of the eight business units and each key region witnessed higher core sales. This marked the sixth successive quarter of core sales growth. On a two-year basis, core sales witnessed growth in every business unit.
This Zacks Rank #3 (Hold) company is witnessing continued online strength, backed by the buy online and pick up in stores, and ship from store services. As a result, the e-commerce business witnessed low-double-digit sales growth, accounting for nearly 22% of total sales in 2021.
Healthy consumption trends in the United States also bode well. Domestic consumption increased across all eight business categories of the company on a two-year basis, with double-digit growth in Writing, Food, Baby, Commercial, Home Appliances and Home Fragrances in the fourth quarter.
Driven by the above-mentioned factors, management issued the guidance for the first quarter and 2022. The company anticipates net sales of $9.93-$10.13 billion for 2022, with core sales of flat to up 2%. The normalized operating margin is expected to be 11.5-11.8%. Normalized earnings per share are estimated to be $1.85-$1.93 for 2022.
For the first quarter, net sales are envisioned to be $2.25-$2.30 billion, with core sales growth of 2-4%. For the quarter, the company expects a normalized operating margin of 8.9-9.3% and normalized earnings of 26-28 cents per share.
Image Source: Zacks Investment Research
Although shares of NWL have lost 1.1% year to date, they came ahead of the industry’s decline of 14%.
Here’s How Better-Ranked Stocks Fared
Some better-ranked stocks in the Consumer Staples sector are Flower Foods (FLO - Free Report) and McCormick & Company (MKC - Free Report) .
Flower Foods is involved in baked food products and produces a wide range of bread, buns, rolls, snack cakes and tortillas. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Flower Foods’ current financial-year sales and earnings suggests growth of 7.2% and 4%, respectively, from the year-ago period’s reported figures. FLO has a trailing four-quarter earnings surprise of 9%, on average.
McCormick is one of the leading manufacturers, marketers and distributors of spices, seasonings, specialty foods and flavors. It also currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported figures. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.