NEWELL RUBBERMAID INC. $20(New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 290.3 million; Market cap: $5.8 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.0%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and a number of other household items. Its top brands include Rubbermaid, Sharpie, Paper Mate, Parker, Graco, Waterman and Levolor.
The company has three divisions: Home & Family, which supplied 41% of its 2010 sales and 35% of its earnings; Office Products (30%, 34%) and Tools, Hardware and Commercial Products (29%, 31%).
Newell recently finished a multi-year restructuring, which included closing plants and getting out of lessprofitable businesses. These moves will cut its yearly costs by $220 million by the end of 2011.
The company also completed a refinancing plan, which lowered the interest costs on $600 million of its debt. Its long-term debt of $2.1 billion is a manageable 36% of its market cap.
These savings are the main reason why Newell earned $436.4 million in 2010, up 18.2% from $369.3 million in 2009. Earnings per share rose 16.0%, to $1.52 from $1.31, on more shares outstanding. These figures exclude restructuring costs.
Sales rose 3.3%, to $5.8 billion from $5.6 billion. However, if you exclude the impact of acquisitions, discontinued products and foreign currency-exchange rates, sales rose by 4.7%.
Newell is using the savings from the restructuring to increase spending on advertising and developing new products. That will help the company compete with cheaper generic-brand products, and boost sales in overseas markets (Newell gets 30% of its sales from outside the U.S.).
The stock has gained over 50% in the past year. Even so, it trades at just 11.8 times the $1.69 a share that the company will probably earn in 2011.
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