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Newell to Divest Goody Products, Transformation Plan Underway
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Newell Brands Inc. (NWL - Free Report) has been progressing well with its Transformation Plan that is focused on creating a simpler, faster and stronger consumer-focused portfolio of leading brands. Recently, management entered into an agreement with ACON Investments, L.L.C., Washington-based private equity investment firm, to divest Goody Products, Inc. This transaction, which is anticipated to close within 30 days, is conditioned upon the satisfaction of customary closing conditions and regulatory approvals.
Goody Products, the maker of hair styling tools and accessories, generated roughly $115 million as net sales in 2017.
Simultaneously, Newell Brands also declared a quarterly cash dividend of 23 cents per share payable Sep 14, 2018 to shareholders of record as of Aug 31.
Meanwhile, Newell Brands’ Transformation Plan that focuses on restructuring the company into a global consumer product entity, valued at more than $9 billion, remains underway. The aforementioned divestiture is in sync with the company’s plans to offload non-core businesses that account for nearly 35% of its sales. Other aspects of the plan include utilizing $10 billion after-tax proceeds from divestitures and free cash flow to lower debt and make share repurchase as well as retaining its investment grade rating and an annual dividend of 92 cents per share through 2019, targeting 30-35% payout ratio. Management is also likely to focus on right-sizing the cost structure for anticipated smaller net sales, remove stranded corporate expenses and recover the synergies lost through the divestitures.
So far, management has completed the previously announced sale of The Waddington Group and Rawlings Sporting Goods Company, Inc. for gross proceeds of $2.7 billion, as a part of its Accelerated Transformation Plan. It received $2.5 billion net of taxes. The sale includes brands like Eco-Products, POLAR PAK, WNA and other industry-leading brands. Newell Brands is also divesting its non-core brands to reshape its portfolio and improve operational efficiency. Moreover, it adds Jostens and Pure Fishing brands to the list of potential divestitures. This apart, the company is exploring strategic alternatives for its Consumer & Commercial Solutions, and Process Solutions, Team Sports, Beauty, and U.S. Playing Cards businesses.
In second-quarter 2018, Newell Brands reported the divested businesses as discontinued operations. Currently, the assets held for sale have been reorganized as continuing operations into the newly-created operating segments.
At the end of the second quarter, the company’s gross debt summed $10.5 billion, which was $900 million lower than prior-year number. Net debt totaled $8.2 billion, down $2.4 year over year. It intends to deleverage an incremental $900 million by the end of the third quarter.
Backed by these strategic moves, Newell Brands is expected to speed up value creation and transform its portfolio to leverage abilities related to innovation, design and e-commerce. Additionally, these initiatives should help improve operational performance, deleverage the balance sheet as well as enhance shareholder value.
However, this Zacks Rank #5 (Strong Sell) stock has lost 25% in a month, much wider than the industry’s 2.8% decline. This underperformance can be attributed to Newell Brands’ lower-than-expected top-line performance in the second quarter and trimmed guidance for the remainder of 2018. Though Newell delivered earnings beat in the second quarter, top line missed estimates for the second straight time.
Normalized earnings per share are now envisioned in the band of $2.45-$2.65 for 2018, down from the $2.65-$2.85 range guided earlier. The Zacks Consensus Estimate for the year is pegged at 88 cents, down from $2.11 in the last seven days.
Calyxt, Inc. pulled off a positive earnings surprise in each of the trailing two quarters and carries a Zacks Rank #2 (Buy).
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) is a Zacks #2 Ranked stock and has an impressive long-term earnings growth rate of 23%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Newell to Divest Goody Products, Transformation Plan Underway
Newell Brands Inc. (NWL - Free Report) has been progressing well with its Transformation Plan that is focused on creating a simpler, faster and stronger consumer-focused portfolio of leading brands. Recently, management entered into an agreement with ACON Investments, L.L.C., Washington-based private equity investment firm, to divest Goody Products, Inc. This transaction, which is anticipated to close within 30 days, is conditioned upon the satisfaction of customary closing conditions and regulatory approvals.
Goody Products, the maker of hair styling tools and accessories, generated roughly $115 million as net sales in 2017.
Simultaneously, Newell Brands also declared a quarterly cash dividend of 23 cents per share payable Sep 14, 2018 to shareholders of record as of Aug 31.
Meanwhile, Newell Brands’ Transformation Plan that focuses on restructuring the company into a global consumer product entity, valued at more than $9 billion, remains underway. The aforementioned divestiture is in sync with the company’s plans to offload non-core businesses that account for nearly 35% of its sales. Other aspects of the plan include utilizing $10 billion after-tax proceeds from divestitures and free cash flow to lower debt and make share repurchase as well as retaining its investment grade rating and an annual dividend of 92 cents per share through 2019, targeting 30-35% payout ratio. Management is also likely to focus on right-sizing the cost structure for anticipated smaller net sales, remove stranded corporate expenses and recover the synergies lost through the divestitures.
So far, management has completed the previously announced sale of The Waddington Group and Rawlings Sporting Goods Company, Inc. for gross proceeds of $2.7 billion, as a part of its Accelerated Transformation Plan. It received $2.5 billion net of taxes. The sale includes brands like Eco-Products, POLAR PAK, WNA and other industry-leading brands. Newell Brands is also divesting its non-core brands to reshape its portfolio and improve operational efficiency. Moreover, it adds Jostens and Pure Fishing brands to the list of potential divestitures. This apart, the company is exploring strategic alternatives for its Consumer & Commercial Solutions, and Process Solutions, Team Sports, Beauty, and U.S. Playing Cards businesses.
In second-quarter 2018, Newell Brands reported the divested businesses as discontinued operations. Currently, the assets held for sale have been reorganized as continuing operations into the newly-created operating segments.
At the end of the second quarter, the company’s gross debt summed $10.5 billion, which was $900 million lower than prior-year number. Net debt totaled $8.2 billion, down $2.4 year over year. It intends to deleverage an incremental $900 million by the end of the third quarter.
Backed by these strategic moves, Newell Brands is expected to speed up value creation and transform its portfolio to leverage abilities related to innovation, design and e-commerce. Additionally, these initiatives should help improve operational performance, deleverage the balance sheet as well as enhance shareholder value.
However, this Zacks Rank #5 (Strong Sell) stock has lost 25% in a month, much wider than the industry’s 2.8% decline. This underperformance can be attributed to Newell Brands’ lower-than-expected top-line performance in the second quarter and trimmed guidance for the remainder of 2018. Though Newell delivered earnings beat in the second quarter, top line missed estimates for the second straight time.
Normalized earnings per share are now envisioned in the band of $2.45-$2.65 for 2018, down from the $2.65-$2.85 range guided earlier. The Zacks Consensus Estimate for the year is pegged at 88 cents, down from $2.11 in the last seven days.
Three Better-Ranked Consumer Staples Stocks
Archer Daniels Midland Company (ADM - Free Report) delivered an average positive earnings surprise of 18.6% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calyxt, Inc. pulled off a positive earnings surprise in each of the trailing two quarters and carries a Zacks Rank #2 (Buy).
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) is a Zacks #2 Ranked stock and has an impressive long-term earnings growth rate of 23%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>