Newell reaches new 52-week high
Shares soared on Friday, following strong first quarter earnings results.
By Zacks Equity Research
Shares of Newell Rubbermaid Inc. (NWL) soared to a new 52-week high of $27.00 on Friday, following its strong first-quarter 2013 earnings results. The producer of Sharpie pens and Rubbermaid containers eventually closed trading at $26.57, which represented a solid year-to-date return of 18.3% and 46.1% over the past year.
Average volume of shares traded over the last three months stands at approximately 2.939 million. Moreover, the stock currently trades at a forward price-to-earnings (P/E) ratio of 14.6, almost at par with the peer group average.
An impressive record of posting better-than-expected bottom-line results, solid top-line growth, margin improvement, a favorable 2013 outlook, notable return on equity and a reasonably healthy financial position are the major factors that drove the shares of this Zacks Rank No. 2 ("buy") company to a new high.
Further, the company is on the threshold of a new growth phase with the development of a state-of-the-art Design Center in Kalamazoo, Mich. The new center, ideally located in a region known for its talented pool of designers from around the world, will be spread over 40,000 square feet, employing up to 100 design professionals.
Slated to open in early 2014, this facility will assist designers at studios and immersion labs, along with marketing and R&D teams to develop and evaluate new creations, all under one roof.
With respect to earnings surprises, Newell has topped the Zacks Consensus Estimates for the past several years, with a trailing four-quarter average surprise of 5%. At the same time, an impressive return on equity compared to its peers acts as a catalyst for the stock. It has a 12-month ROE of 24.9%, which is above its peer group average of 22.6%.
Last week, the company reported first-quarter 2013 adjusted earnings per share of 35 cents, beating the Zacks Consensus Estimate and year-ago quarter earnings of 32 cents. The earnings growth resulted from a better operating performance, lower interest expenses and a favorable tax rate.
Leveraging its strong brand equity, Newell Rubbermaid expects core sales growth of 2% to 4% and adjusted earnings in the range of $1.78 to $1.84 per share for fiscal 2013.
Further, we believe that Newell’s Project Renewal program will help reduce operating costs and complexity of the organization, while it will increase investments in the most important growth areas within the business. The company is expected to be saving a cumulative $270 to $325 million annually from mid 2015.
Apart from Newell, other stocks in the retail space that touched all-time highs on the same trading day are Gap Inc. (GPS), Dean Foods Company (DF) and Constellation Brands Inc. (STZ), reaching $39.13, $19.57 and $50.34, respectively.
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