Why Newell Brands Stock Jumped on Friday
Newell Brands (NASDAQ: NWL) investors had a great end to their week. The consumer staples company's shares jumped 10% in early Friday trading. That's as compared to a 1.2% rally in the S&P 500. The boost only erased some of Newell Brands' recent losses, though. Shares remain down 10.3% so far in 2024 compared to a 6.9% increase in the wider market.
Friday's rally was sparked by positive news on Newell Brands' earnings trends.
The good news
Management said in a pre-market press release that organic sales fell 5% in Q1, which isn't usually good news. Yet that performance marked an improvement over the prior quarter's 9% slump. Newell Brands, which manufactures various consumer and commercial products, notched a few other helpful wins in the period, including higher profit margins and better cash flow.
Executives credited their cost-cutting projects with helping the company's finances. "The decisive actions we've taken as part of our new strategy have led to excellent progress on the major operational and financial priorities for this year," CEO Chris Peterson said in a press release.
It wasn't all good news in this report. Newell Brands' sales footprint is still shrinking, after all. And the company is still generating net losses even if those losses have improved over the past year.
Looking ahead
Executives affirmed their 2024 outlook that calls for organic sales to fall by as much as 6% while adjusted profit margin rebounds thanks to cost cuts and efficiency gains. Yet it's still unclear how long it will take to return to sustainable sales and earnings growth. Newell Brands' demand trends look weak, and management has had to rely on price increases to drive essentially all of its sales growth lately.
That's why most investors will want to watch this consumer staples stock for now, at least until there are more encouraging signs of an operating rebound on the way.
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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Newell Brands Stock Jumped on Friday was originally published by The Motley Fool
