Shares of Newell Rubbermaid Inc. (NWL) soared to a new 52-week high of $26.58 on Friday, Apr 19, beating its previous high of $26.11 reached on Mar 28. The producer of Sharpie pens and Rubbermaid containers eventually closed trade at $26.37, which represented a solid year-to-date return of 16.6% and 53.2% over the past one year.
Average volume of shares traded over the last 3 months stands at approximately 2.927 million. Moreover, the stock currently trades at a forward P/E of 14.5x, almost at par with the peer group average.
An impressive record of posting better-than-expected bottom-line results, solid top-line growth, margin improvement, a favorable 2013 outlook, notable return on equity and a reasonably healthy financial position, are the major factors that drove the shares of this Zacks Rank #3 (Hold) company to a new high.
Further, the company is on the threshold of a new growth phase with the development of a state-of-the-art Design Center in Kalamazoo, Mich. The new center, ideally located in a region known for its talented pool of designers from around the world, will be spread over 40,000 square feet, employing up to 100 design professionals.
Slated to open in early 2014, this facility will assist designers at studios and immersion labs along with marketing and R&D teams to develop and evaluate new creations, all under one roof.
With respect to earnings surprises, Newell has topped the Zacks Consensus Estimates for the past several years, with a trailing four-quarter average surprise of 5.0%. At the same time, an impressive return on equity compared to its peers acts as a catalyst for the stock. It has a 12-month ROE of 24.9%, which is above its peer group average of 21.9%.
In February, the company reported adjusted earnings of 43 cents per share for the fourth quarter of 2012, marginally beating the Zacks Consensus Estimate of 42 cents and year-ago quarter earnings of 40 cents. Net sales inched up 1.6% to $1,518.8 million, surpassing the Zacks Consensus Estimate of $1,514.0 million.
Leveraging its strong brand equity, Newell Rubbermaid expects core sales growth of 2%–4% and adjusted earnings in the range of $1.78–$1.84 per share for fiscal 2013.
Further, we believe that Newell’s Project Renewal program will help it reduce operating costs and complexity of the organization, while it will increase investments in the most important growth areas within the business. The company is expected to be saving a cumulative $270–$325 million annually from the middle of 2015.
Apart from Newell, other stocks in the retail space that touched all-time highs on the same trading day are The Home Depot Inc. (HD), The Clorox Company (CLX) and Rite Aid Corp. (RAD), reaching $74.28, $90.10 and $2.48, respectively.
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