Will Lower Core Sales Hurt Newell's (NWL) Earnings in Q1?
Newell Brands Inc. NWL is slated to report first-quarter 2019 results on May 3, before the opening bell.
A glimpse of the company’s earnings performance shows that it has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 39.6%.
However, the Zacks Consensus Estimate for first-quarter earnings is pegged at 6 cents, indicating a significant decline from 34 cents registered in the year-ago quarter. Notably, the consensus mark has remained unchanged over the past 30 days.
Newell Brands Inc. Price and EPS Surprise
Newell Brands Inc. Price and EPS Surprise | Newell Brands Inc. Quote
Let’s See How Things Are Shaping Up Prior to 1Q19
Newell’s weak top-line trend remains a concern in the to-be-reported quarter. Lower core sales, foreign currency headwinds and adverse impact of the new revenue recognition standard have been hurting sales. Notably, decline in sales at all its segments caused the overall top line to decrease in the last reported quarter. Moreover, the company marked the fourth consecutive quarter of sales miss. Apparently, the Zacks Consensus Estimate for first-quarter revenues stands at $1.7 billion, implying a 44.2% decline from the prior-year quarter figure.
However, management had earlier stated that it witnessed sequential improvement in core sales trends across all its segments and three of the four regions. Meanwhile, the company continues to witness decline in core sales since the start of 2019, which might also prove detrimental to the company’s first-quarter results. In fact, soft sales and comps projection for 2019 might also reflect in the first quarter.
Conversely, Newell has been smoothly progressing with its Transformation plan, which is expected to create value and leverage capabilities with respect to innovation, design and e-commerce. Also, the company remains on track with divestment of its underperforming and non-core brands to reshape its portfolio and improve operational efficiency. Proceeds from sale of these assets are utilized to lower debt and make share repurchases.
What the Zacks Model Unveils
Our proven model does not conclusively show that Newell is likely to beat earnings estimates in first-quarter 2019. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Newell has a Zacks Rank #3 but its Earnings ESP of -16.67% makes surprise prediction difficult.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:
Church & Dwight Co., Inc. CHD has an Earnings ESP of +1.06% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Estee Lauder EL has an Earnings ESP of +0.77% and a Zacks Rank #2.
Keurig Dr Pepper Inc. KDP has an Earnings ESP of +1.08% and a Zacks Rank #3.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
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