Is Newell Rubbermaid Now Dead Money?

There are many stocks which are supposed to be at least somewhat immune to the recession.  This notion has become less and less true, even if some of the former recession-proof stocks have not fallen so much as others.  It seems no earnings are sacred, and that is now also the case at Newell Rubbermaid Inc. (NYSE: NWL).

Newell Rubbermaid now expects earnings at $0.06 to $0.10 EPS,excluding a $0.09 tax benefit.  Thomson Reuters (First Call) hasestimates pegged at $0.32 EPS.  The company’s own prior guidancewithout any tax benefit was $0.29 to $0.34 EPS.  The company is takingdown the annual target to $1.17 to $1.21 EPS.

We had noticed how the latest pop in Newell Rubbermaid had taken the stock backup near a resistance level.  It was as if the chart was waiting fornews to catapult it higher from the recent lows or to smack it backdown.  The guidance is one thing that offers no comfort today, but thefurther out comments may put a lid on this one for quite some time.

The company is blaming extraordinary volatility, weaker-than-expecteddemand, and customer inventory reductions in all geographies and marketsegments.  It also said that trends are worsening into the end of thequarter, and management expects no rebound any time soon.

In order to cut costs, the company has announced layoffs, salaryfreezes, inventory reductions, and manufacturing facility closures.

The company may be selling itself short.  If the economy keeps tanking,the company might be able to pass some of its products off as urns forashes of loved ones and pet burial caskets. 

Newell Rubbermaid stock is down more than 10% at $11.75 after about 35minutes of trading.  The stock’s 52-week trading range is $9.42 to$26.30.

Jon C. Ogg
December 17, 2008