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Here's How Newell (NWL) is Placed Just Before Q4 Earnings

Newell Brands Inc. NWL is expected to witness year-over-year declines in the top and bottom lines when it reports fourth-quarter 2022 earnings on Feb 10, before the opening bell.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 12 cents, which suggests a decline of 71.4% from the year-ago quarter’s reported figure. The consensus mark has been unchanged in the past 30 days. For quarterly revenues, the consensus mark is pegged at $2.24 billion, indicating a decline of 20.2% from the figure reported in the year-ago quarter.

In the last reported quarter, the Atlanta, GA-based company delivered an earnings surprise of 12.8%. Its bottom line beat the Zacks Consensus Estimate by 23.7%, on average, in the trailing four quarters.

Newell Brands Inc. Price and EPS Surprise

 

Newell Brands Inc. Price and EPS Surprise
Newell Brands Inc. Price and EPS Surprise

Newell Brands Inc. price-eps-surprise | Newell Brands Inc. Quote

Key Factors to Note

Newell has been witnessing the continued effects of the tough macro environment, reduced inventory, inflationary pressures and the impact of a stronger dollar. The company’s sales for the to-be-reported quarter are likely to have been affected by the adverse impacts of the sale of the Connected Home & Security (CH&S) business, unfavorable foreign currency, and exit of its category and retail store. The company is also expected to have been affected by the significant inflation in food, housing and energy, leading to reduced consumer discretionary spending.

On the last reported quarter’s earnings call, management expected the aforementioned headwinds to persist in the near term. Newell also predicted the discretionary spending levels to remain constrained.

On its last reported quarter’s earnings call, management envisioned fourth-quarter 2022 net sales to be $2.18-$2.26 billion, with a core sales decline of 9-12%. For the quarter, the company expects a normalized operating margin of 5.1-6.5% and normalized earnings of 9-14 cents per share. The guidance includes the impacts of unfavorable foreign currency, closures of Yankee Candle stores, and the exit of certain product categories, particularly in the Outdoor & Recreation, and Home Appliances segments.

Moreover, the company expects 2022 results to reflect the adverse impacts of unfavorable foreign currency and inflation. It anticipates net sales of $9.35-$9.43 billion, with core sales expected to decline 3-4% in 2022, excluding the contribution from the CH&S business. The company anticipates a normalized operating margin of 10-10.3%. Normalized earnings per share are forecast to be $1.56-$1.61 for 2022.

However, Newell has been benefiting from the actions to accelerate productivity and efficiency by accelerating fuel productivity plans, driving automation and fully implementing Project Ovid. Increased focus on revenue growth management, aggressive efforts to reduce SKU and supply network optimization are expected to have aided the fourth-quarter performance. Also, the company’s stringent cost-cutting plans, such as rightsizing overhead costs based on the simplification agenda, are likely to have boosted margins and the bottom line to some extent.

Newell’s fourth-quarter results are expected to reflect the positive effects of leveraging its robust e-commerce capabilities, which have been strong for some time due to the increasing shifts to the online platform. The company has been strengthening its e-commerce business via increased investments and better customer engagement. Continued digital penetration, driven by expanded omnichannel capabilities, is likely to have supported the top line in the fourth quarter.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Newell this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Newell currently has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

Coca-Cola KO currently has an Earnings ESP of +0.75% and a Zacks Rank of 2. The company is likely to register top-line growth when it reports fourth-quarter 2022 results, while the bottom line is likely to be flat year over year. The consensus mark for KO’s quarterly revenues is pegged at $9.98 billion, which suggests 5.4% growth from the figure reported in the prior-year quarter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus mark for Coca-Cola’s quarterly earnings has moved down 4.3% in the past 30 days to 45 cents per share. The consensus estimate for KO’s fourth-quarter earnings is expected to be flat with the year-ago quarter’s reported figure. KO has delivered an earnings beat of 8.8%, on average, in the trailing four quarters.

Molson Coors TAP currently has an Earnings ESP of +3.49% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports fourth-quarter 2022 results. The Zacks Consensus Estimate for TAP’s quarterly earnings has moved up by a penny in the past 30 days to $1.06 per share. The consensus estimate indicates growth of 30.9% from the year-ago quarter's loss per share of 9 cents.

Molson Coors’ top line is expected to have risen year over year. The Zacks Consensus Estimate for TAP’s quarterly revenues is pegged at $2.68 billion, suggesting growth of 2.4% from the figure reported in the prior-year quarter. TAP has delivered a negative earnings surprise of 12.3%, on average, in the trailing four quarters.

Kellogg's K currently has an Earnings ESP of +4.12% and a Zacks Rank of 3. The company is likely to register increases in the top and bottom lines when it reports fourth-quarter 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.7 billion, which suggests a rise of 7% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Kellogg’s quarterly earnings has been unchanged at 84 cents per share in the past 30 days. The consensus mark for K suggests 1.2% growth from the year-ago quarter’s reported number. K has delivered an earnings beat of 10.6%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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CocaCola Company (The) (KO) : Free Stock Analysis Report

Newell Brands Inc. (NWL) : Free Stock Analysis Report

Molson Coors Beverage Company (TAP) : Free Stock Analysis Report

Kellogg Company (K) : Free Stock Analysis Report

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