Newell Rubbermaid (NWL) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Newell Rubbermaid ( NWL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Newell Rubbermaid as such a stock due to the following factors:

  • NWL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.2 million.
  • NWL has traded 61,423 shares today.
  • NWL traded in a range 201.8% of the normal price range with a price range of $1.14.
  • NWL traded above its daily resistance level (quality: 23 days, meaning that the stock is crossing a resistance level set by the last 23 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on NWL:

Newell Rubbermaid Inc. manufactures and markets consumer and commercial products worldwide. It operates through five segments: Writing, Home Solutions, Tools, Commercial Products, and Baby & Parenting. The stock currently has a dividend yield of 1.9%. NWL has a PE ratio of 29.2. Currently there are 9 analysts that rate Newell Rubbermaid a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Newell Rubbermaid has been 1.4 million shares per day over the past 30 days. Newell Rubbermaid has a market cap of $10.5 billion and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 0.72 and a short float of 2.1% with 3.96 days to cover. Shares are up 2.8% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Newell Rubbermaid as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.5%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 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.
  • 40.44% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 3.40% trails the industry average.
  • Compared to its closing price of one year ago, NWL's share price has jumped by 30.97%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • NEWELL RUBBERMAID INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, NEWELL RUBBERMAID INC reported lower earnings of $1.33 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.33).

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