This consumer products company beat analysts’ estimates by a penny last quarter, posting EPS of $0.87 per share.
Newell Brands (NWL)
From DRIP Investor
Consumer products companies face a number of challenges these days, including lots of competition and a changing landscape for selling their wares. One firm that is doing a good job of surviving and even thriving is Newell Brands (NWL). The company has put up good top- and bottom-line numbers of late, fueled by a big acquisition, strategic pruning of its product line, and an expanding online presence.
The stock is down around 11% from its 52-week high of $55 per share. These shares also offer an attractive growth-and-income play.
Newell Brands has a stable of popular brand names, including Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Coleman, Jostens, Marmot, Rawlings, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid, Graco, Baby Jogger, NUK, Calphalon, Contigo, First Alert, Waddington, and Yankee Candle. The firm expanded its product line significantly with the 2016 merger of Jarden. Newell isn’t about just acquiring brands; the firm has been willing to trim product lines as well. To that end, the firm has sold its Rubbermaid consumer storage business and is shedding some winter apparel lines.
The company has done a good job so far of creating synergies from the Jarden deal. Net sales grew 5% in the quarter, with 2.5% core sales growth against a tough quarterly comparison. Synergies and cost savings helped drive per-share earnings growth of 11.5%. The company delivered core sales growth in all four regions—North America (up 2%), Europe (2.5%), Latin America (over 9%), and Asia Pacific (nearly 5%). A continuing bright spot for the company is its growing e-commerce business. Online sales, which represent about 10% of global sales, grew
strong double digits in the quarter.
The company has increased its rate of investment in its e-commerce business and is well on its way to its near-term goal of 500 dedicated e-commerce employees by year-end. For 2017 overall, the company expects profits in the range of $3 to $3.20 per share. Per-share profits should grow double digits in 2018. That type of earnings growth will continue to drive dividend growth.
The company raised its dividend 21% earlier this year, and another double-digit increase is expected in 2018.
Companies that depend on brick-and-mortar retailers to sell their goods have had a hard time on Wall Street over the last year, and part of that concern is impacting stocks like Newell Brands. However, the company’s products have strong followings—the firm saw market shares increasing in product categories that generated over 70% of U.S. sales—and its success in the e-commerce channel should differentiate it from other consumer-products companies. Downside should be limited to the mid-$40s, and the firm should test the $55 level by year-end.
Please note Newell offers a direct-purchase plan whereby any investor may buy the first share and every share of stock directly from the company.
Charles A. Carlson, CFA, DRIP Investor, www.dripinvestor.com, 800-233-5922, September 2017