Dear Mr. Berko: What happened to Newell? I bought 500 shares at $43 in September 2017. My broker tells me to sell the stock and take a loss and wants me to put the proceeds in American Funds New Perspective. Your advice would be appreciated.
— JM, Moline, Ill.
Dear JM: New Perspective (ANWPX) is a good fund with a good record and a sweet commission would be paid to your broker.
It’s important to know that Newell Brands (NWL-$27) is a $14.7 billion company, and global marketer of consumer and commercial products in more than 200 countries. And most of its brands have high recognition value like Coca-Cola, Microsoft and Kleenex, so it’s important to know NWL sells Paper Mate, Sharpie, Dymo, Parker, Elmer’s, Coleman, Jostens, Rawlings, Irwin, Lenox, Oster, First Alert, Sunbeam, Mr. Coffee, Rubbermaid Brands, Graco, Baby Jogger, Food Saver, Yankee Candle, Crock-Pot, etc. And, there’s a NWL product in almost every consumer’s home, office, factory, restaurant, grocery and school.
Since June of 2017, NWL shares slumped nearly 50 percent from $55 to the current $27 price. NWL’s $15 billion acquisition of Jarden doubled 2016 revenues and earnings grew by 30 percent to $1.25 a share. And in 2017, revenues continued to improve by nearly 12 percent and earnings are expected to come in at an attractive $2.75 a share. These good numbers are the result of an impressive doubling of net profit margins, an improving e-commerce business, brand-enhancing investments, strong distribution networks and employee/management efficiencies. In 2017, management really hunkered down and NWL benefited handsomely from the Jarden merger and significant cost reductions in raw materials, manufacturing and shipping were reflected in the numbers. However, in the third quarter of 2017, NWL’s revenues slipped nearly 8 percent due to weaker-than-expected back-to-school sales, a difficult consumer market, weather conditions such as a devastating hurricane season and a shift in its hugely diversified portfolio. Resultantly, 2017 earnings of $3.00 a share and revenues of $15 billion were much lower than the Street’s estimate. Numbers for 2017 were dramatically better than all previous years, and still NWL shares plunged from $55 to a low of $25 in late January of 2018.
