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Newell (NWL) Q4 Earnings Surpass Estimates, Sales Down Y/Y

Newell Brands Inc. NWL posted fourth-quarter 2023 results, wherein both sales and earnings beat their respective Zacks Consensus Estimate. The company’s normalized earnings were 22 cents per share, up 37.5% from the year-ago quarter’s level of 16 cents. Also, the figure beat the bottom-line estimate of 17 cents.

Net sales declined 9.1% year over year to $2.1 billion on lower core sales and impacts of category exits. Nonetheless, the metric exceeded the consensus estimate of $2 billion. This was somewhat offset by positive currency impacts. Also, core sales fell 9.3% year over year.

The normalized gross margin expanded 570 bps year over year to 32.3%. The normalized operating margin increased 280 bps year over year to 7.7% in the reported quarter.

In the past three months, shares of this currently Zacks Rank #2 (Buy) company have risen 3.7% compared with the industry’s 2.6% growth.

Segmental Details

Net sales in the Home & Commercial Solutions segment were $1.3 billion in the fourth quarter, down 7.1% from the year-ago period. The metric beat the consensus mark of $1.2 billion. Core sales declined 8.2% year over year, with sluggishness in each of the three businesses, Kitchen, Home Fragrance and Commercial. Also, the impacts of certain category exits acted as deterrents.

Newell Brands Inc. Price, Consensus and EPS Surprise

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

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

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The Learning and Development segment recorded net sales of $635 million, which declined 7.2% from the year-ago quarter. The metric beat the consensus mark of $543.3 million. The downtrend was led by a 7.7% decrease in core sales along with a decline in the Writing and Baby businesses.

The Outdoor and Recreation segment’s net sales of $165 million declined 21.8% from the year-ago quarter. Also, the metric lagged the consensus mark of $198.9 million.  Core sales declined 21.8% in the quarter.

Other Financial Details

Newell Brands ended the quarter with cash and cash equivalents of $0.3 billion, long-term debt of $4.6 billion, debt outstanding of $4.9 billion and shareholders’ equity of $3.1 billion. NWL also provided $930 million in cash for operating activities during 2023.

Outlook

Management issued guidance for the first quarter and 2024. The company anticipates 2024 sales to decrease 5-8% year over year with a core sales decline of 3-6%. The normalized operating margin is expected to be 7.8-8.2% for 2024. Normalized earnings per share (EPS) are forecast to be 52-62 cents, down from 79 cents reported last year.

For 2024, the company envisions an operating cash flow of $400-$500 million. This includes $150-$200 million in cash related to restructuring efforts.

For first-quarter 2024, net sales are envisioned to dip 8-10%, with a core sales decline of 6-8%. For the quarter, the company expects a normalized operating margin of 2.4-3.2% and a loss of 5-9 cents per share.

Other Stocks to Consider

We highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Church & Dwight Co. CHD, Colgate-Palmolive CL and Inter Parfums IPAR.

Church & Dwight, offering a broad range of household, personal care and specialty products, currently carries a Zacks Rank of 2. CHD has a trailing four-quarter earnings surprise of 10.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Church & Dwight’s current financial year’s sales and earnings indicates growth of 8.7% and 6.4%, respectively, from the year-ago numbers.

Colgate-Palmolive, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for CL’s current financial-year sales and earnings implies growth of 3.5% and 7.7%, respectively, from the year-ago reported figures.

Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for IPAR’s current financial-year sales and earnings indicates growth of 20.9% and 20.2%, respectively, from the year-ago figures. It has a trailing four-quarter earnings surprise of 45.7%, on average.

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

Colgate-Palmolive Company (CL) : Free Stock Analysis Report

Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report

Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report

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