Can Newell's Transformation Plan Help Regain Stock Momentum?
Zacks Investment Research | Aug 15, 2019 09:22PM ET
Newell Brands Inc. (NASDAQ:NWL) is grappling with lower core sales coupled with adverse impacts of foreign currency translations, which have been affecting its top line for quite some time. Evidently, the company’s sales lagged the Zacks Consensus Estimate in five of the last six quarters in second-quarter 2019.
Moreover, its earnings and sales fell year over year in the second quarter mainly due to the aforementioned headwinds. This, coupled with a decline in sales across the Food & Appliances and Home & Outdoor Living segments, further weighed on the company’s performance.
Management expects the adverse effects of currency on its results to continue throughout 2019 due to strong U.S. dollar. It expects currency headwinds to hurt the top line by nearly 150 basis points (bps) in 2019 and 100 bps in the third quarter. Further, currency headwinds will continue to mar the company’s gross and operating margins for the aforementioned periods.
Consequently, Newell estimates net sales of $2.42-$2.47 billion along with a core sales decline of 2-4% for third-quarter 2019. It also anticipates normalized operating margin contraction of 100-130 bps to 11.9-12.2%.
Driven by these limitations, Newell’s stock has been in the doldrums. Shares of the company have lost 22.3% in a year, wider than the Original post
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