Newell Brands Will Continue to Show Strength Post Earnings

Newell Brands (NASDAQ:NWL) is expected to post another solid earnings report when it updates shareholders on Friday, February 12. The whisper number is projecting that the company will post earnings of 67 cents per share, well above the 48 cents EPS projected by analysts. If that comes to pass, Newell will deliver a clean sweep by beating analysts’ profit expectations in each quarter in 2020.

More importantly, if the numbers hold up, Newell will post a 4.8% year-over-year (YOY) gain in revenue and a 9% YOY gain on the bottom line. That may be one reason that NWL stock got an endorsement from Jim Cramer the host of CNBC’s Mad Money. On February 5, Cramer told his audience that Newell Brands was finally making a meaningful comeback.

Newell has been a pandemic winner. The company is perhaps best known for its Rubbermaid brand and that category was certainly a winner as consumers spent more time at home and began looking for ways to organize their refrigerators, pantries, and home.

With that being said, the company’s 2020 revenue was below its 2018 number and that’s where investors may start to cast a skeptical eye at the NWL stock price. The stock is 52% higher than it was when it reported fourth-quarter earnings two years ago. For a company in a mature category like Newell that’s difficult to overlook.

However, it’s not unreasonable to expect that strong demand will continue into 2021. First, the company may get a lift from a growing housing market. As people move, they frequently look for storage solutions.

Beyond that anecdotal information, the company is unquestionably making a successful pivot to e-commerce. In the company’s most recent earnings report, they reported e-commerce sales were up 40% year-to-date and comprised 21% of total sales. That was double the company’s 2018 total.

Newell Is Going Ex-Dividend

Another catalyst for NWL stock is the company’s upcoming ex-dividend date. Stocks trend to rise as investors buy into the stock prior to the ex-dividend date to ensure that they can collect the dividend.

Newell Brands is known as a value stock. And although it’s been several years since the company has raised its dividend, it has continued to issue a dividend throughout the pandemic. The company recently announced it will pay out its quarterly dividend on March 10, 2021.

Technical Indicators Suggest the Stock Will Move Higher

The technical outlook for NWL stock suggests there are more gains to come. On both February 8 and then again February 9, Newell set new 52-week highs. And with the stock comfortably above its 50- and 200-day moving averages, the stock has a bullish setup.

The stock is going back and forth between a gain and a loss heading into earnings, but the volume is also down – NWL stock is trading at about 75% of volume.

What are the analysts saying?

The consensus among the 10 analysts that provide a rating on Newell Brands say the stock is a hold and have a price target of $20. However, several analysts have issued price targets since the beginning of the year and those targets are far more favorable.

With that said, it’s fair for growth-minded investors to question how much further NWL stock can run. But if you’re expecting NWL stock to fall back in a meaningful way, you may have to wait until after the company’s ex-dividend date passes on February 26, 2021.

Right now, NWL stock is in a pattern of higher highs and higher lows which suggests a bullish setup for NWL stock which should remain in place until, at least, after the ex-dividend date. However if Cramer is oright and the company is finally making a comeback, then bears may be waiting awhile for a pullback.

Contrarian investors should look to jump in if the stock drops to around $25.