Rubbermaid’s Parent Company Is on the Verge of a Comeback with Shares Exploding 25%+! Here's Why...

Happy Saturday, everyone and Happy Saturday to Newell Brands who is somehow back from the dead - or at least, have managed to slap a massive Band-Aid on their financial wounds that is (see: -55.% stock plunge over the last five years). 

(Source: Giphy) 

In short, the parent company of everyone’s favorite plastic container brand, Rubbermaid (and a bunch of other household staples like Sharpie and Coleman), saw its stock soar nearly 25% on Friday after announcing that its turnaround plan is “on track.” Translation: they’re still losing money, just not as much as before. I mean, progress is progress, amirite? 

(Source: Yahoo Finance) 

For instance, Newell Brands reported that it cut its third-quarter losses by a whopping $20 million—bringing the total net loss for the quarter to a cool $198 million. That’s $0.48 per share down from $0.53. Not exactly snappin’ necks and cashin’ checks, but when you’re hemorrhaging cash, every little bit helps. Meanwhile, normalized earnings were $0.16 per share, which, surprisingly, was in line with what analysts were expecting. 

(Source: Zacks) 

Revenue, however, wasn’t looking as hot. It fell 5% to $1.95 billion—just shy of the $1.96 billion analysts were hoping for. Newell’s Learning & Development division (hello, Graco and Sharpie) saw a 3% bump in sales, bringing in $717 million. But the Home & Commercial Solutions segment (think Rubbermaid) and the Outdoor & Recreation segment (read: Coleman) were feeling the pain—sales were down 7% and 21%, respectively. Oooof.

What’s more is that Newell’s CEO Chris Peterson is singing a familiar tune with all this: “business transformation is well underway.” Which he is right. Well… sort of. The company has been in the trenches of its turnaround plan for over five quarters now, and while they’re far from out of the woods, things are looking... less bleak? 

(Source: Investopedia) 

Peterson also acknowledged that the “macroeconomic backdrop” (read: the economy has been a dumpster fire) is still uncertain, but he’s confident that the changes Newell is making will set the company up for long-term success.

On the other hand, despite Newells sales struggles, the company did manage to boost its margins—because apparently, they’re getting pretty good at cutting costs. The company’s normalized gross margin jumped 470 basis points to 35.4%, and the operating margin rose 210 basis points to 9.5%. Why is that a big deal? Because margins are what keep the lights on in corporate America. Duhhh…

(Source: Giphy) 

Plus, speaking of keeping the lights on, Newell’s operating cash flow for the first nine months of the year came in at $346 million. They also managed to reduce their net debt by over $560 million in the past five quarters, bringing their leverage ratio down to 4.9 times. Not too shabby. 

In addition to the positive report, (and most importantly to Wall Street Logic 101), Newell raised its full-year outlook for 2024, expecting normalized earnings per share to land somewhere between $0.63 and $0.66 (up from a previous estimate of $0.60 to $0.65). They’re also predicting operating cash flow to hit $500 million to $600 million. That’s a lot of zeros and a lot of happy analysts.

(Source: Seeking Alpha) 

Of course though, there are still some red flags waving in the distance. For example, core sales were down 1.7%, and the Outdoor & Recreation segment is still taking a beating. Plus, with inflation and lower-income households tightening their belts, Newell’s products are not exactly flying off the shelves. But hey, they’re making progress, and sometimes, that’s all you need to keep Wall Street happy.

Bottom line? Newell isn’t necessarily out of the woods (yet), but there is a path ahead. Sure, they have a long way to go, but with five consecutive quarters of gross margin improvement and a solid cash flow situation, they’re definitely gaining some steam with their financials… and with Wall Street. 

(Source: Giphy) 

And while the turnaround may be slow for some (read: poor shareholders), at least we can all agree it’s happening. So with that, keep an eye on this one - because if they can keep cutting costs and boosting margins, well they may just come out of this alive - unlike, you know, Tupperware (R.I.P.). 

In the meantime, enjoy your Saturday friends and as always, stay safe and stay frosty! Until next time… 

P.S. At 9:35am EST on Thursday, our screeners were flashing major SQUEEZE signs on one little known stock priced at $1.43 - whereas, in less than 5 minutes from notifying our premium members, this stock annihilated shorts, hitting a peak of 193.47% in less than ONE hour! Don’t miss next week's massive setup - click here now for the details…

Stocks.News does not hold positions in companies mentioned in the article.