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Newell Brands Inc. (NWL - Free Report) posted second-quarter 2024 results, wherein earnings beat the Zacks Consensus Estimate and improved year over year. Sales remained soft in the quarter. Nevertheless, the company is seeing significant progress in its turnaround efforts. Its operational and financial priorities, along with the implementation of the new corporate strategy and front-end commercial capabilities, appear encouraging.
The company’s normalized earnings per share (EPS) were 36 cents, up from 24 cents in the year-ago quarter. The bottom-line figure also surpassed the consensus mark of 21 cents per share.
Net sales declined 7.8% year over year to $2,033 million on lower core sales, as well as the impacts of business exits and adverse foreign exchange. Also, the metric was below the consensus estimate of $2,043 million. Core sales fell 4.2% year over year. However, pricing across the international markets to offset inflation and currency was a significant contributor to core sales.
The normalized gross margin expanded 490 bps year over year to 34.8%. The normalized operating margin increased 170 bps year over year to 10.8%.
In the past three months, shares of this Zacks Rank #4 (Sell) company have lost 20.6% against the industry’s 2.5% growth.
Segmental Details
Net sales in the Home & Commercial Solutions segment were $962 million in the second quarter, down 9.1% from the year-ago period. The metric missed the Zacks Consensus Estimate of $981.8 million. Core sales slipped 4.3% year over year, driven by decreases in each of the three businesses, Kitchen, Home Fragrance and Commercial. Also, the impacts of a few business exits acted as deterrents.
Newell Brands Inc. Price, Consensus and EPS Surprise
The Learning and Development segment recorded net sales of $813 million, in line with the year-ago quarter. The metric beat the consensus mark of $781.2 million. We note that core sales grew 1.5%, which was offset by the adverse impacts of adverse foreign exchange. Core sales grew in the Writing and Baby businesses.
The Outdoor and Recreation segment’s net sales of $258 million declined 22.5% from the year-ago quarter. Also, the metric lagged the consensus mark of $271.9 million. Core sales fell 18.2% in the quarter.
Other Financial Details
Newell ended the quarter with cash and cash equivalents of $382 million, long-term debt of $4.1 billion, outstanding debt of $5 billion and shareholders’ equity of $3.1 billion. NWL also provided $64 million in cash for operating activities during the year-to-date period through the second quarter.
Outlook
Management issued guidance for the third quarter and revised the view for 2024. The company anticipates 2024 sales to drop 6-7% year over year, with a core sales dip of 3-4%. Earlier, management projected sales to decrease 5-8% year over year and a core sales decline of 3-6%. The normalized operating margin is likely to be 8-8.2% compared with the prior expected range of 7.8-8.2%. Normalized EPS is forecast to be 60-65 cents compared with the prior anticipated range of 52-62 cents and 79 cents reported last year.
The company envisions operating cash flow to be in the range of $450-$550 million. This includes $150-$200 million in cash payments related to restructuring efforts.
For the third quarter, net sales are envisioned to dip 4-6%, with core sales in the band of flat to 2% drop. The company expects a normalized operating margin of 8.3-8.8% and normalized EPS of 14-17 cents.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported level.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Post Holdings (POST - Free Report) , a consumer-packaged goods company, is involved in the production of refrigerated, foodservice and nutrition product categories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for POST’s current financial-year sales and EPS indicates growth of 14.2% and 6.9%, respectively, from the year-ago reported figures.
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Newell's (NWL) Q2 Earnings Beat Mark, Soft Core Sales Hurt
Newell Brands Inc. (NWL - Free Report) posted second-quarter 2024 results, wherein earnings beat the Zacks Consensus Estimate and improved year over year. Sales remained soft in the quarter. Nevertheless, the company is seeing significant progress in its turnaround efforts. Its operational and financial priorities, along with the implementation of the new corporate strategy and front-end commercial capabilities, appear encouraging.
The company’s normalized earnings per share (EPS) were 36 cents, up from 24 cents in the year-ago quarter. The bottom-line figure also surpassed the consensus mark of 21 cents per share.
Net sales declined 7.8% year over year to $2,033 million on lower core sales, as well as the impacts of business exits and adverse foreign exchange. Also, the metric was below the consensus estimate of $2,043 million. Core sales fell 4.2% year over year. However, pricing across the international markets to offset inflation and currency was a significant contributor to core sales.
The normalized gross margin expanded 490 bps year over year to 34.8%. The normalized operating margin increased 170 bps year over year to 10.8%.
In the past three months, shares of this Zacks Rank #4 (Sell) company have lost 20.6% against the industry’s 2.5% growth.
Segmental Details
Net sales in the Home & Commercial Solutions segment were $962 million in the second quarter, down 9.1% from the year-ago period. The metric missed the Zacks Consensus Estimate of $981.8 million. Core sales slipped 4.3% year over year, driven by decreases in each of the three businesses, Kitchen, Home Fragrance and Commercial. Also, the impacts of a few business exits acted as deterrents.
Newell Brands Inc. Price, Consensus and EPS Surprise
Newell Brands Inc. price-consensus-eps-surprise-chart | Newell Brands Inc. Quote
The Learning and Development segment recorded net sales of $813 million, in line with the year-ago quarter. The metric beat the consensus mark of $781.2 million. We note that core sales grew 1.5%, which was offset by the adverse impacts of adverse foreign exchange. Core sales grew in the Writing and Baby businesses.
The Outdoor and Recreation segment’s net sales of $258 million declined 22.5% from the year-ago quarter. Also, the metric lagged the consensus mark of $271.9 million. Core sales fell 18.2% in the quarter.
Other Financial Details
Newell ended the quarter with cash and cash equivalents of $382 million, long-term debt of $4.1 billion, outstanding debt of $5 billion and shareholders’ equity of $3.1 billion. NWL also provided $64 million in cash for operating activities during the year-to-date period through the second quarter.
Outlook
Management issued guidance for the third quarter and revised the view for 2024. The company anticipates 2024 sales to drop 6-7% year over year, with a core sales dip of 3-4%. Earlier, management projected sales to decrease 5-8% year over year and a core sales decline of 3-6%. The normalized operating margin is likely to be 8-8.2% compared with the prior expected range of 7.8-8.2%. Normalized EPS is forecast to be 60-65 cents compared with the prior anticipated range of 52-62 cents and 79 cents reported last year.
The company envisions operating cash flow to be in the range of $450-$550 million. This includes $150-$200 million in cash payments related to restructuring efforts.
For the third quarter, net sales are envisioned to dip 4-6%, with core sales in the band of flat to 2% drop. The company expects a normalized operating margin of 8.3-8.8% and normalized EPS of 14-17 cents.
Key Picks
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter average earnings surprise of 118.2%. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported level.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Post Holdings (POST - Free Report) , a consumer-packaged goods company, is involved in the production of refrigerated, foodservice and nutrition product categories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for POST’s current financial-year sales and EPS indicates growth of 14.2% and 6.9%, respectively, from the year-ago reported figures.