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Will Newell (NWL) Retain its Positive Earnings Trend in Q1?

Newell Brands Inc. NWL is slated to report first-quarter 2019 results on May 1, before the opening bell. In the last reported quarter, the company delivered a positive earnings surprise of 7.7%. In fact, Newell boasts a splendid earnings surprise history. The company’s earnings outperformed the Zacks Consensus Estimate by 49.1%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for first-quarter earnings has moved up by a penny to 6 cents in the past seven days. However, the estimate suggests a decline of 57.1% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $1,910 million, indicating growth of 11.6% from the figure reported in the year-ago quarter.

Key Factors to Note

Newell has been gaining from the Transformation Plan. The company’s transformation efforts have enabled it to deliver growth via improving productivity, overhead cost savings, e-commerce growth, complexity reduction and working capital initiatives. Also, it has been divesting underperforming and non-core brands, and simplifying operations to reshape the business portfolio and improve operational efficiency. Gains from the efforts have been aiding top and bottom-line performances in the past few quarters.

Newell Brands Inc. Price and EPS Surprise

 

Newell Brands Inc. price-eps-surprise | Newell Brands Inc. Quote

However, on its last earnings call, the company provided a soft outlook for first-quarter 2020. It predicted sales to be impacted by the timing of order shipments in the Food unit due to the SAP implementation in the prior year and the WoodWick wholesale expansion-related pipeline build in the prior year for the Home Fragrance pipeline unit. Additionally, it expected sales results for the first quarter to reflect potential incremental impacts from the outbreak of coronavirus in China due to travel disruptions and its impacts on corporate operations.

The company predicted net sales of $1.9-$1.95 billion for the quarter, with a core sales decline of 3-5%. It anticipates normalized operating margin contraction of 50-90 basis points from the prior year to 5.2-5.6%, owing to an increase in advertising spending. Normalized earnings per share are expected to be 5-8 cents, suggesting a decline from 14 cents earned in first-quarter 2019.

What the Zacks Model Unveils

Our proven model doesn’t predict an earnings beat for Newell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Newell carries a Zacks Rank #4 (Sell) and has an Earnings ESP of +20.00%.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Sprouts Farmers Market, Inc. SFM currently has an Earnings ESP of +17.01% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight Co., Inc. CHD presently has an Earnings ESP of +3.56% and a Zacks Rank #2.

Colgate-Palmolive Company CL currently has an Earnings ESP of +0.79% and a Zacks Rank #3.

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Colgate-Palmolive Company (CL): Free Stock Analysis Report
 
Newell Brands Inc. (NWL): Free Stock Analysis Report
 
Church & Dwight Co., Inc. (CHD): Free Stock Analysis Report
 
Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report
 
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