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Newell (NWL) Up 3.7% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Newell Brands Inc. (NWL - Free Report) . Shares have added about 3.7% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is NWL due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Newell Beats on Q4 Earnings & Sales, Retains FY18 View
Newell Brands delivered fourth-quarter 2017 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate. However, decline in both top and bottom line did raise some concerns. Nevertheless, management retained its 2018 view.
This Hoboken, NJ-based company posted normalized earnings of 68 cents per share that surpassed the Zacks Consensus Estimate by a penny but declined 15% year over year from 80 cents in the prior-year quarter. Management highlighted that lost contributions from divested operations, fall in core sales volume, adverse pricing, and commodity cost inflation coupled with increased share count hurt the bottom line. These were partly mitigated by ongoing cost savings and related synergies, contributions from acquisitions and lower tax rate.
Net sales of $3,743.1 million came ahead of the Zacks Consensus Estimate of $3,716 million but declined 9.5% year over year on account of the adverse impact from divestitures, net of buyouts. Core sales fell 1.9%. E-commerce sales worldwide surged more than 25% during the quarter under review, and now represent 11% of net sales.
Normalized gross margin contracted 420 basis points to 33% during the quarter. Meanwhile, normalized operating margin shriveled 290 basis points to 13.4% in the quarter under review.
Segmental Performance
Live segment net sales increased 2.7% to $1,724.8 million from the year-ago period. However, core sales decreased 1.8% on account of soft results from Appliances and Baby, partly offset by growth in Home Fragrance and Fresh Preserving.
Net sales at Learn segment came in at $551 million, down 8.9% from the prior-year period. Core sales fell 9.7% due to double-digit decline in Writing, partially offset by growth from Jostens.
Work segment net sales of $705 million declined 3% year over year. Core sales decreased 1.2% on account softness witnessed in the Consumer and Commercial Solutions business, partly offset by growth from Waddington and Safety & Security.
Net sales at the Play segment came in at $563 million, up 6.6% from the prior-year period. Core sales rose 5.4% due to sturdy growth registered in Coleman, Contigo, Marmot and Team Sports partly offset by declines in Fishing.
The Other segment net sales of $198 million plunged 66.7% from the prior-year period on account of the divestitures of the Tools, Winter Sports, Fire Starter and Fire Log, and Cordage businesses. Core sales declined 0.8% due to weakness in Home & Family, partly offset by growth in the Process Solutions business.
Other Financial Details
Newell ended the quarter with cash and cash equivalents of $485.7 million, long-term debt of $9,889.6 million and shareholders’ equity of $14,144.7 million, excluding non-controlling interests of $36.6 million. The company lowered debt load by $1.4 billion in 2017.
The company generated operating cash flow of $990 million compared with $992 million in the prior-year period. During the quarter, the company returned $264 million to shareholders in the form of dividends and share buyback.
Outlook
Management continues to project normalized earnings per share in the band of $2.65-$2.85 and envisions operating cash flow in the range of $1.15-$1.45 billion for 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
At this time, NWL has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise NWL has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Newell (NWL) Up 3.7% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Newell Brands Inc. (NWL - Free Report) . Shares have added about 3.7% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is NWL due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Newell Beats on Q4 Earnings & Sales, Retains FY18 View
Newell Brands delivered fourth-quarter 2017 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate. However, decline in both top and bottom line did raise some concerns. Nevertheless, management retained its 2018 view.
This Hoboken, NJ-based company posted normalized earnings of 68 cents per share that surpassed the Zacks Consensus Estimate by a penny but declined 15% year over year from 80 cents in the prior-year quarter. Management highlighted that lost contributions from divested operations, fall in core sales volume, adverse pricing, and commodity cost inflation coupled with increased share count hurt the bottom line. These were partly mitigated by ongoing cost savings and related synergies, contributions from acquisitions and lower tax rate.
Net sales of $3,743.1 million came ahead of the Zacks Consensus Estimate of $3,716 million but declined 9.5% year over year on account of the adverse impact from divestitures, net of buyouts. Core sales fell 1.9%. E-commerce sales worldwide surged more than 25% during the quarter under review, and now represent 11% of net sales.
Normalized gross margin contracted 420 basis points to 33% during the quarter. Meanwhile, normalized operating margin shriveled 290 basis points to 13.4% in the quarter under review.
Segmental Performance
Live segment net sales increased 2.7% to $1,724.8 million from the year-ago period. However, core sales decreased 1.8% on account of soft results from Appliances and Baby, partly offset by growth in Home Fragrance and Fresh Preserving.
Net sales at Learn segment came in at $551 million, down 8.9% from the prior-year period. Core sales fell 9.7% due to double-digit decline in Writing, partially offset by growth from Jostens.
Work segment net sales of $705 million declined 3% year over year. Core sales decreased 1.2% on account softness witnessed in the Consumer and Commercial Solutions business, partly offset by growth from Waddington and Safety & Security.
Net sales at the Play segment came in at $563 million, up 6.6% from the prior-year period. Core sales rose 5.4% due to sturdy growth registered in Coleman, Contigo, Marmot and Team Sports partly offset by declines in Fishing.
The Other segment net sales of $198 million plunged 66.7% from the prior-year period on account of the divestitures of the Tools, Winter Sports, Fire Starter and Fire Log, and Cordage businesses. Core sales declined 0.8% due to weakness in Home & Family, partly offset by growth in the Process Solutions business.
Other Financial Details
Newell ended the quarter with cash and cash equivalents of $485.7 million, long-term debt of $9,889.6 million and shareholders’ equity of $14,144.7 million, excluding non-controlling interests of $36.6 million. The company lowered debt load by $1.4 billion in 2017.
The company generated operating cash flow of $990 million compared with $992 million in the prior-year period. During the quarter, the company returned $264 million to shareholders in the form of dividends and share buyback.
Outlook
Management continues to project normalized earnings per share in the band of $2.65-$2.85 and envisions operating cash flow in the range of $1.15-$1.45 billion for 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
Newell Brands Inc. Price and Consensus
Newell Brands Inc. Price and Consensus | Newell Brands Inc. Quote
VGM Scores
At this time, NWL has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise NWL has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.