Summary
- Newell's shares rallied after reporting first-quarter results but quickly gave it all up.
- Prospects improving as assets sold.
- Company has enough cash flow to sustain dividend.
- This idea was discussed in more depth with members of my private investing community, DIY Value Investing. Start your free trial today »
Just when Newell Brands (NWL) looked as though it would sink below $13.60 in April, buying interest spiked when the company reported first-quarter earnings. On top of that, shares offer income investors (of record May 30) a dividend yielding 6.11%. With the company around midway through its turnaround, should investors bet that the worst is over?
Newell reported earnings of $0.14 as revenue fell 5.5% to $1.71 billion. Cash flow improved by $200 million over last year. Though the stock rallied to above $16 only to give it up in the days that followed, the turnaround is clearly progressing. But management did not address the safety of its dividend on its conference call. This might explain why buying momentum from income investors weakened.
