Back to top

Image: Bigstock

Factors Likely to Decide Newell's (NWL) Fate in Q2 Earnings

Read MoreHide Full Article

Newell Brands Inc. (NWL - Free Report) is expected to witness a year-over-year decline in the top and bottom lines when it reports second-quarter 2022 earnings on Jul 29, before the opening bell.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 47 cents, which suggests a decline of 16.1% from the year-ago quarter’s figure. The consensus mark has moved down by a penny in the past seven days. For quarterly revenues, the consensus mark is pegged at $2.56 billion, indicating a decline of 5.5% from the figure reported in the year-ago quarter.

In the last reported quarter, the Atlanta, GA-based company delivered an earnings surprise of 33.3%. Its bottom line beat the Zacks Consensus Estimate by 23.3%, on average, in the trailing four quarters.

Key Factors to Note

Newell has been witnessing elevated advertising and promotional expenses related to product launches and omni-channel investments. Ongoing inflationary pressures, mainly related to resin, sourced finished goods, transportation and labor, are likely to have been other concerns.

Industry-wide supply-chain disruptions, including port congestion, limited container availability, and shortage of labor and truck drivers, remain headwinds. These are likely to have dented its second-quarter performance.

However, solid demand, product innovation and robust core sales growth are anticipated to have been upsides. Strength in its e-commerce capabilities, including buy online and pick up in stores, and ship from store, is anticipated to have continued in the to-be-reported quarter.

Newell has been witnessing continued improvement in the Writing Business, driven by some accelerated back-to-school orders and robust merchandising plans. Strength in the Sharpie and Paper Mate brands bodes well. The company also remains focused on product innovations in this category. These are expected to have provided some cushion to the top line in the second quarter.

On the last reported quarter’s earnings call, management envisioned net sales of $2.52-$2.57 billion for second-quarter 2022, with core sales growth in the low-single digits. The company expected a normalized operating margin of 11.7-12.1% and normalized earnings of 45-48 cents per share.

Newell Brands Inc. Price and EPS Surprise

 

Newell Brands Inc. Price and EPS Surprise

Newell Brands Inc. price-eps-surprise | Newell Brands Inc. Quote

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Newell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Newell currently has a Zacks Rank #3 and an Earnings ESP of -2.47%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

Corteva (CTVA - Free Report) has an Earnings ESP of +8.12% and currently sports a Zacks Rank #1. CTVA is anticipated to register top and bottom-line growth when it reports the second-quarter 2022 results. The Zacks Consensus Estimate for Corteva’s quarterly revenues is pegged at $6.2 billion, indicating an improvement of 9.4% from the figure reported in the prior-year quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Corteva’s bottom line has been unchanged in the past 30 days to $1.46 per share. However, the consensus estimate for CTVA suggests growth of 4.3% from the year-ago quarter’s reported figure. CTVA has delivered an earnings beat of 22.3%, on average, in the trailing four quarters.

General Mills (GIS - Free Report) currently has an Earnings ESP of +0.58% and a Zacks Rank #2. GIS is likely to register top-line growth when it reports first-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for the company’s quarterly revenues is pegged at $4.62 billion, which suggests growth of 1.7% from the figure reported in the prior-year quarter.

However, the Zacks Consensus Estimate for General Mills’ quarterly earnings has moved down by a penny in the past 30 days to 98 cents per share, suggesting a decrease of 1% from the year-ago quarter’s reported number. GIS has delivered an earnings beat of 6.5%, on average, in the trailing four quarters.

Hershey (HSY - Free Report) currently has an Earnings ESP of +1.84% and a Zacks Rank of 3. The company is expected to register top and bottom-line growth when it reports the second-quarter 2022 numbers. The Zacks Consensus Estimate for ADM’s quarterly revenues is pegged at $2.2 billion, which suggests growth of 11.7% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Hershey’s quarterly earnings has moved up by a penny in the past 30 days at $1.67 per share, suggesting a 13.6% decline from the year-ago reported number. HSY has delivered an earnings beat of 7.9%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Newell Brands Inc. (NWL) - free report >>

Hershey Company The (HSY) - free report >>

General Mills, Inc. (GIS) - free report >>

Corteva, Inc. (CTVA) - free report >>