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Venezuela’s Impact on Newell Rubbermaid’s Performance

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Jan. 20 2016, Updated 1:35 p.m. ET

Price movement of Newell Rubbermaid

Newell Rubbermaid (NWL) has a market cap of $9.7 billion. NWL fell by 2.5% to close at $36.20 per share on January 19, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases are -8.0%, -19.9%, and -17.9%, respectively.

Technically, NWL stock has broken the support and is trading below all moving day averages. Currently, NWL is trading 14.2% below its 20-day moving average, 17.0% below its 50-day moving average, and 13.0% below its 200-day moving average.

The PowerShares DWA Consumer Staples Momentum ETF (PSL) invests 3.5% of its holdings in Newell Rubbermaid. The ETF tracks an index of US consumer cyclical companies selected and weighted by price momentum. The YTD price movement of PSL is -1.9%.

The competitors of Newell Rubbermaid (NWL) and their market caps are as follows:

  • Fortune Brands Home & Security (FBHS) – $7.6 billion
  • Avery Dennison (AVY) – $5.4 billion
  • Tupperware Brands (TUP) – $2.5 billion
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Impact of Venezuela on Newell Rubbermaid

On Friday, January 15, 2016, Venezuela’s government declared a 60-day economic emergency. Now, President Nicolás Maduro will intervene in companies or limit access to already scarce dollars in Venezuela. Venezuela’s economy contracted by 4.5% in the first nine months of 2015, and annual inflation rate rose to 141.5% with high oil prices.

This will impact Newell Rubbermaid’s operations in Venezuela. The company can deconsolidate its operations with a charge of $111 million to protect the financial results.

Performance of Newell Rubbermaid in fiscal 3Q15

Newell Rubbermaid (NWL) reported fiscal 3Q15 net sales of $1,530.0 million. That’s a rise of 3.1% compared to net sales of $1,484.5 million in fiscal 3Q14. Its net income and EPS (earnings per share) rose to $134.2 million and $0.50, respectively, in fiscal 3Q15, compared to $122.3 million and $0.44, respectively, in fiscal 3Q14.

Accounts receivable and inventories rose by 1.1% and 13.9%, respectively, in fiscal 3Q15 compared to the prior year period. Its debt-to-equity ratio rose to 2.8 in fiscal 3Q15 compared to the debt-to-equity ratio of 2.1 in fiscal 3Q14.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Newell Rubbermaid are 25.3x and 5.5x, respectively, as of January 19, 2016.

The company has projected the following figures for fiscal 2015:

  • net sales to rise 3.0%–3.5%
  • normalized EPS of $2.14–$2.20

The company has projected the following figures for fiscal 2016 (including Venezuela):

  • net sales to rise 2.5%–3.5%
  • normalized EPS of $2.35–$2.44

The company has projected the following figures for fiscal 2016 (excluding Venezuela):

  • net sales to rise 2.5%–3.5%
  • normalized EPS of $2.21–$2.30
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