Newell's (NWL) Strategic Growth On Track: Should You Add?
Zacks Investment Research | Dec 07, 2016 04:14AM ET
Newell Brands Inc. (NYSE:NWL) has been doing well with its new Growth Game Plan, Project Renewal Program and solid earnings track record. In addition, its strategic buyouts, including the Jarden acquisition, also act as growth catalysts.
The stock closed trading at $45.68 yesterday and has increased 3.6% on a year-to-date basis, clearly outperforming the Zacks categorized Consumer Product–Miscellaneous Staples industry that has declined 4.7%.
Newell’s Project Renewal Program remains on track and achieved savings of nearly $395 million through first-quarter end. Management plans to utilize major part of the savings to accelerate business growth and the balance is expected to reflect in earnings. Moving ahead, the company expects annual cost savings from this program to reach nearly $700 million.
Meanwhile, the company remains keen on enhancing its portfolio by investing in key segments, reducing activities with marginal profitability, along with exiting certain businesses and markets. In order to simplify its portfolio structure, the company undertakes restructuring schemes, as evident from its recent merger with Jarden Corp. that created a new $16-billion entity with diverse operations.
Additionally, Newell declared plans to transform into an operating company from a holding company – with fresh investment plans and new ideas for its combined portfolio with Jarden. Subsequently, the company announced its intention to trim its existing 32 business units to 16 operating divisions, which include the establishment of an all-new eCommerce unit with global operations.
Further, Newell Brands plans to sell about 10% of its current portfolio, including a large chunk of its Tools segment and the Outdoor Solutions Segment’s Winter Sports businesses, among others. These changes highlight its commitment toward making strategic investments in areas with higher growth potential. Alongside, the company’s shareholder-friendly moves are noteworthy.
However, significant global presence exposes the company to currency headwinds, posing threats. Further, macroeconomic uncertainty, competitive pressure and volatile consumer behavior remain concerns for the company.
NEWELL BRANDS Price and Consensus
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Blue Buffalo, which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 14%. The stock has gained 28% year to date.
Edgewell Personal, a Zacks Rank #2 stock, has a long-term earnings growth rate of 8.1%.
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