Newell Rubbermaid Inc. (NWL) has posted big gains over the last 4 months, easily outpacing the S&P 500 as the economy shows signs of stabilization.

Company Description

Newell Rubbermaid Inc. designs, manufactures and distributes consumer and commercial products like office products, tools and home cleaning products worldwide. The company was founded in 1903 and has a market cap of $3.74 billion.

Shares of NWL recently broke above a key level of short-term resistance on strong second-quarter results, reported on July 30, and rising estimates,

Second-Quarter Results

Although sales were down from last year, the company produced solid earnings, coming in at 47 cents per share, 12 cents ahead of the Zacks Consensus Estimate.

Newell has produced consistent earnings over the last year in a very tough environment, surprising in each of the last four quarters by an average of 7 cents, or 57%.

Margin Expansion

With sales down for the quarter, the company’s profits were helped by an expansion of its gross margin, up 3% from last year on lower input costs and exiting certain product lines.

Guidance Raised

During the earnings release, Newell went ahead and raised its full-year earnings guidance to between $1.15 and $1.30 per share, up from the previous range of $1 to $1.25.

Analysts are bullish on the company’s longer term prospects as well, with the next-year estimate pegged at $1.40, an 11% growth projection.

Valuation

Based on the current-year estimate, this stock has a P/E multiple of 10.6X, a sharp discount to the S&P 500, trading with a multiple of 17X.

The Chart

Shares of NWL are up big over the last 4 months after bottoming out just above $4 in early March. More recently, shares broke above a key level of short-term resistance at $12.50 and surged just a pinch shy of $14. Take a look at the nice move below.

Zacks Investment Research
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