Newell Brands Inc. NWL is worth giving a shot right now as its sound fundamentals and growth efforts look impressive. The Zacks Rank #1 (Strong Buy) stock boasts of a VGM Score of A and a long-term earnings growth rate of 2.9%. Topping it, the Zacks Consensus Estimate for 2020 and 2021 earnings is pegged at $1.69 and $1.62 per share, indicating a rise of 32% and 10.2%, respectively, in the past 30 days.
Notably, shares of this company have rallied 31.1% in the past three months against the industry’s decline of 5%. It has also outperformed the Consumer Staples sector’s growth of 0.7%.
That said, let’s delve into the factors that make Newell a promising bet.
Factors Narrating Newell’s Growth Story
Newell Brands has been witnessing a steady bottom-line performance for a while now, recording its fifth straight quarter of earnings beat in third-quarter 2020. Despite a challenging backdrop, results gained from solid sales growth, driven by robust consumption patterns, improved margins and strong cash flow. Core sales improved 7.2% driven by growth at majority of its business units and across all regions. The standouts in the quarter were food, appliance and cookware, and commercial business units.
Markedly, to take advantage of consumers’ increasing preference for online purchasing, Newell Brands has been focusing on enhancing its e-commerce capabilities. E-commerce business registered 40% year-over-year growth with global e-commerce penetration rising 21% in the third quarter. Undoubtedly, this positive trend is likely to continue in the near term.
Apart from these, the company is progressing well with its Project FUEL plan that focuses on enhancing productivity. In the last reported quarter, core sales grew 19.5% at Home Solutions, 17% at Appliances & Cookware, 13.3% at Commercial Solutions and 8.1% at Outdoor & Recreation segments.
Encouragingly, management issued an upbeat guidance for fourth-quarter 2020. The company guided normalized earnings in the band 40-46 cents, whose midpoint of 43 cents suggests an improvement from 42 cents reported in the last-year quarter. Further, it projected net sales between $2.5 billion and $2.6 billion, with core sales likely to be flat to up low-single-digit. For the full year, the company forecasts sales of $9.2-$9.3 billion, with normalized earnings between $1.63 and $1.69 per share.
Newell is progressing well with the SKU rationalization plan along with efforts to lower overhead costs in a bid to improve efficiency. Further, it remains focused on product innovation, increasing investments in e-commerce capabilities and enhancing marketing strategies.
Looking for Solid Food Stocks? Check These
Grocery Outlet Holding GO has a long-term earnings growth rate of 14.7% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tupperware Brands TUP has a long-term earnings growth rate of 12% and a Zacks Rank #1.
Procter Gamble Company PG, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7.6%.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
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