Newell Brands Q3 Earnings: Can NasdaqGS:NWL Hit Its $0.44 EPS Target?

in EARNINGS/INVESTING IDEAS by

Newell Brands Inc. (NasdaqGS:NWL) is scheduled to report Q3 earnings results before markets open for trading on October 30, 2020.

The company is expected to report earnings of $0.44/share on revenue of $2.483 billion. The consensus earnings per share (EPS) of $0.44/share is based on a poll of 11 analysts and represents a decline in eps of −40.2% over the same quarter last year, when the company reported earnings of $0.73/share.

The revenue forecast of $2.483 billion based on a poll of 7 analysts implies a year-over-year (YoY) growth in revenue of 1.3%. Last year the company reported $2.451 billion in revenue for the quarter.

Expected to report EPS contraction of −40.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,482.62 $2,450.60 1.3%
EPS $0.44 $0.73 −40.2%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Newell Brands Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.18 $0.30 67.1% Beat
Q1, 2020 $0.05 $0.09 77.8% Beat
Q4, 2019 $0.37 $0.42 13.0% Beat
Q3, 2019 $0.55 $0.73 33.1% Beat
Q2, 2019 $0.36 $0.45 26.5% Beat
Q1, 2019 $0.06 $0.14 141.8% Beat
Q4, 2018 $0.65 $0.71 10.0% Beat
Q3, 2018 $0.64 $0.81 26.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −7.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 31, 2020 $17.72 $16.40 −7.4% Decline
May 1, 2020 $13.88 $12.28 −11.5% Decline
February 14, 2020 $19.52 $20.10 3.0% Increase
November 1, 2019 $18.97 $20.60 8.6% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.25, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.25 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Newell Brands Inc. is currently trading at $17.44/share, down −3.1% for the day. The company is trading at approximately 83.1% of its 52-week high of $20.99/share. The company’s stock price is up 6.3% since the last earnings report and down −1.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 46.37 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:NWL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −6.96 and a forward P/E multiple of 14.51.

Newell Brands Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.12. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $17.44
P/E Ratio −7.0x
P/E Ratio (Fwd) 14.5x
PEG Ratio −0.1
Total Debt / Total Capital 47.1%
Levered Free Cash Flow $941.1 million
EV / EBITDA 11.6x

Finbox

Newell Brands Inc. is a mid-cap stock with a market capitalization of $7.4 billion and a total enterprise value of $13.618 billion. The company operates in the Consumer Discretionary sector and the Household Durables industry.

Newell Brands Inc. designs, manufactures, sources, and distributes consumer and commercial products worldwide. The company operates through four segments: Appliances and Cookware, Food and Commercial, Home and Outdoor Living, and Learning and Development. The Appliances and Cookware segment offers household products, including kitchen appliances, gourmet cookware, bakeware, and cutlery under the Calphalon, Crock-Pot, Mr. Coffee, Oster, and Sunbeam brands. The Food and Commercial segment offers food storage and home storage products, and fresh preserving products, vacuum sealing products, commercial cleaning and maintenance solutions, hygiene systems, and material handling solutions under the Ball, FoodSaver, Rubbermaid, Sistema, Rubbermaid Commercial Products, Mapa, Quickie, and Spontex brands. The Home and Outdoor Living segment offers products for outdoor and outdoor-related activities, home fragrance, and connected home and security products under the Chesapeake Bay Candle, Coleman, Contigo, ExOfficio, First Alert, Marmot, WoodWick, and Yankee Candle brands. The Learning and Development segment offers writing instruments, including markers and highlighters, pens, and pencils; art products; activity-based adhesive and cutting products; labeling solutions; and baby gear and infant care products under the Aprica, Baby Jogger, Dymo, Elmer’s, EXPO, Graco, Mr. Sketch, NUK, Paper Mate, Parker, Prismacolor, Sharpie, Tigex Waterman, and X-Acto brands. It markets its products to clubs, department stores, drug/grocery stores, mass merchants, specialty retailers, distributors and e-commerce companies, home centers, sporting goods retailers, warehouse clubs, office superstores and supply stores, contract stationers, and travel retail, as well as sells directly to consumers via on-line. Newell Brands Inc. was formerly known as Newell Rubbermaid Inc. and changed its name to Newell Brands Inc. in April 2016. The company was founded in 1903 and is based in Atlanta, Georgia.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.