Will Newell Rubbermaid (NWL) Stock Benefit From Ignite Holdings Acquisition?

NEW YORK (TheStreet) -- Newell Rubbermaid  (NWL) is acquiring Ignite Holdings from North Castle Partners for $308 million, growing its Home Solutions unit by adding Contigo and Avex to RubbermaidCalphalon, Goody and Levolor brands in the consumer products company's first major acquisition since 2008, the Wall Street Journal reports.

Ignite, a designer and marketer of reusable beverage containers, is expected to have $125 million of net sales in 2014.

Newell Rubbermaid stock is down -0.70% to $31.13 today.

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Separately, TheStreet Ratings team rates NEWELL RUBBERMAID INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NEWELL RUBBERMAID INC (NWL) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Durables industry and the overall market, NEWELL RUBBERMAID INC's return on equity exceeds that of both the industry average and the S&P 500.
  • 41.88% is the gross profit margin for NEWELL RUBBERMAID INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 4.29% is above that of the industry average.
  • Net operating cash flow has increased to -$92.10 million or 25.18% when compared to the same quarter last year. Despite an increase in cash flow of 25.18%, NEWELL RUBBERMAID INC is still growing at a significantly lower rate than the industry average of 209.23%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • NEWELL RUBBERMAID INC's earnings per share declined by 18.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NEWELL RUBBERMAID INC increased its bottom line by earning $1.45 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($1.97 versus $1.45).
  • You can view the full analysis from the report here: NWL Ratings Report
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