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Newell Brands’ Top Line Rose in 1Q16

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Price movement

Newell Brands (NWL) has a market cap of $12.7 billion. NWL rose by 3.6% to close at $47.18 per share on May 2, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 7.1%, 3.6%, and 7.6%, respectively, as of that day.

This means that NWL is trading 6.2% above its 20-day moving average, 11.3% above its 50-day moving average, and 13.1% above its 200-day moving average.

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Related ETF and peers

The PowerShares DWA Consumer Staples Momentum Portfolio ETF (PSL) invests 3.0% of its holdings in Newell. This ETF tracks an index of US consumer cyclical firms selected and weighted by price momentum. The YTD price movement of PSL was -1.3% as of April 29, 2016.

The market caps of Newell Brands’ competitors are as follows:

  • Fortune Brands Home & Security (FBHS) – $8.7 billion
  • Avery Dennison Corporation (AVY) – $6.7 billion
  • Tupperware Brand Corporation (TUP) – $3.0 billion

Performance of Newell Brands in fiscal 1Q16

Newell Brands (NWL) reported fiscal 1Q16 net sales of $1,314.9 million, a rise of 4.0% compared to net sales of $1,264.0 million in fiscal 1Q15. Sales of the company’s Writing, Home Solutions, and Baby & Parenting segments rose by 10.8%, 2.1%, and 9.2%, respectively, and sales of tools and commercial products segments fell by 0.39% and 5.8%, respectively, in fiscal 1Q16 compared to fiscal 1Q15.

It reported restructuring costs of $17.7 million in fiscal 1Q16 compared to $27.3 million in fiscal 1Q15. It also reported a loss on the termination of the credit facility of $45.9 million in fiscal 1Q16.

In fiscal 1Q16, its net income and EPS (earnings per share) fell to $40.5 million and $0.15, respectively, compared to $54.1 million and $0.20, respectively, in fiscal 1Q15.

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Newell’s accounts receivable and inventories rose by 12.8% and 2.7%, respectively, in fiscal 1Q16 compared to fiscal 1Q15. It reported cash and cash equivalents of $8,180.9 million in fiscal 1Q16 compared to $215.4 million in fiscal 1Q15. Its current ratio and long-term debt-to-equity ratio rose to 4.8x and 6.0x, respectively, in fiscal 1Q16 compared to 1.1x and 1.2x, respectively, in fiscal 1Q15.

Projections

Newell Brands (NWL) has made the following projections for fiscal 2016:

  • core sales growth in the range of 3.0%–4.0%
  • normalized EPS in the range of $2.75–$2.90
  • effective tax rate in the range of 29%–30%

In the next part, we’ll take a look at Brunswick Corporation.

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