Will Newell Rubbermaid (NWL) Miss Earnings?

Zacks

Newell Rubbermaid Inc. (NWL) is scheduled to report its first-quarter fiscal 2014 results before the market opens on May 2. Last quarter, this producer of Sharpie pens and Rubbermaid containers posted a positive earnings surprise of approximately 2.17%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Newell posted better-than-expected earnings results for fourth-quarter fiscal 2013 benefiting from enhanced operating performance, lower share count and lower tax rate. Top-line growth coupled with improved gross profit helped increase operating income, while operating margin remained flat.

During the quarter, the company benefited from the cost savings generated by the Project Renewal initiatives that were diverted towards advertising and promotional expenses, offset by higher advertising expenses. Further, the company remains optimistic about its fiscal 2014 results and provided an encouraging guidance for the year.

Earnings Whispers?

Our proven model does not conclusively project Newell as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:

Zacks ESP: ESP for Newell is 0.00% since the Most Accurate estimate stands at 32 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks Rank #4 (Sell): Newell’s Zacks Rank #4 when combined with 0.00% ESP makes surprise prediction difficult. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks That Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

The Walt Disney Company’s (DIS) Earnings ESP stands at +1.03% and it carries a Zacks Rank #2 (Buy).

Vitamin Shoppe Inc. (VSI) with an Earnings ESP of +1.47% holds a Zacks Rank #2 (Buy).

CST Brands Inc. (CST) has an Earnings ESP of +14.29% and a Zacks Rank #3 (Hold).

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