Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Newell Rubbermaid Inc. (NWL), Avery Dennison Corp (AVY): Expensive or Way, Way Too Expensive?

Page 1 of 2

Speaking at the Barclays Capital Back-to-School Consumer Conference on Wednesday, consumer and commercial products maker Newell Rubbermaid Inc. (NYSE:NWL) CEO Michael Polk told investors his company is off to a “solid” start in 2013 — and that he has every confidence of hitting the company’s earnings guidance for the year.

If only that were good enough.

Newell Rubbermaid Inc. (NYSE:NWL)According to Polk, Rubbermaid will likely earn about $1.42 per diluted share this year, and would be likely to earn as much as $1.82 but for a series of onetime charges to earnings. Investors welcomed the news, bidding up Rubbermaid shares by 3.2% in midday trading, but I have to say that I think that’s the wrong reaction.

How high should Rubbermaid bounce?
As a medium-sized “conglomerate” company, with its hands in many pots, finding perfectly analogous companies to which to compare Rubbermaid to see if it’s “priced right” is no simple task — but there does appear to be a valuation disconnect here.

Avery Dennison Corp (NYSE:AVY), which competes with Rubbermaid in some business products categories, and The Clorox Company (NYSE:CLX) and The Procter & Gamble Company (NYSE:PG), which compete in cleaning products, all look a bit cheaper than Rubbermaid at trailing P/E ratios of 18.7, 19.4, and 20.1, respectively. Mattel, Inc. (NASDAQ:MAT), whose children-focused wares arguably rival Rubbermaid’s Graco, Aprica, and Teutonia brands, is even cheaper than these other Rubbermaid competitors, sporting a trailing P/E of 18.6.

As I say, while the case is hardly open and shut, Rubbermaid does look expensive relative to the competition.

And judged on its own merits, Rubbermaid looks even more overpriced. Based on trailing earnings, Rubbermaid shares currently carry a valuation of 21 times earnings. Valued on the company’s likely earnings for the full year, that P/E drops to 18.7. Valued on Polk’s suggested “adjusted” earnings, it could drop as low as 14.6.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!