Newell Rubbermaid Stock Is Drawing a Pretty Picture

Like many consumer-goods companies, Newell Rubbermaid (NYSE: NWL  ) is best known for the products it makes. Lately, though, it's been the dependable earnings growth and solid dividend that have led investors to buy Newell Rubbermaid stock, and if the company can deliver on expectations in the coming years, then its shares could see even further gains. Let's take a closer look at what's been happening with Newell Rubbermaid lately and how it's has helped boost the stock.

What the company does
Newell Rubbermaid has an extensive lineup of well-known products. Its namesake Rubbermaid food storage containers are the ones most associated with the company, but it also makes Calphalon cookware along with Graco strollers and car seats, Dymo label makers and industrial printers, and a full line of pens with brand names like Sharpie, Parker, and Paper Mate.

Interestingly, those different groups have seen disparate results lately. In its most recent quarterly report, Newell Rubbermaid highlighted rising sales in its home and commercial products segments, even as its writing implement business and its tools business suffered. In particular, weak conditions in the office-products retail industry led to a 9% drop in sales in its writing segment, and the company cited the coming merger of Office Depot and OfficeMax as creating further headwinds as those companies sell off their existing inventory in stores they plan to close.

But Newell Rubbermaid has been going through some extensive restructuring, with cost-cutting measures like consolidating its production plants, reducing its labor force, and finding more efficient business divisions. That helped Newell Rubbermaid stock emerge from a substantial downturn two years ago and has left it better able to handle some of the challenges it has faced.

Where growth will come from
One area that Newell Rubbermaid still has to tap fully is emerging markets. The company has done a good job of expanding overseas, with 17% annual growth in Latin America. But with barely a quarter of its sales coming from outside the U.S. and Canada, the company has a lot further to go. Storage rival Tupperware (NYSE: TUP  ) gets fully 60% of its total revenue from emerging markets, and it too has seen impressive gains in South America as well as the Asia-Pacific region.

In addition, Newell Rubbermaid plans to open a design center early next year to help boost its research and development. With as many as 100 designers collaborating to come up with innovative new products, Newell Rubbermaid is clearly following in the steps of office-products giant 3M, whose Post-it Notes revolutionized the industry and helped prove 3M's mettle.

What investors like to see
Probably the prettiest thing investors have seen from Newell Rubbermaid stock lately is the restoration of its dividend. After having to slash its payouts during the financial crisis, the company has managed to triple its dividend since early 2011, recovering much of the ground those payouts lost.

NWL Dividend Chart

Newell Rubbermaid dividend data by YCharts.

If Newell Rubbermaid can cash in on its opportunities in emerging markets, then it should have plenty more room to push its dividends up further in the years to come. The company has been understandably conservative about pushing its dividend back up, but with its payout representing less than half of its earnings, Newell Rubbermaid has leeway to make further increases in the future.

Are more highs in order?
Despite the impressive move in Newell Rubbermaid stock, calls for impressive earnings growth as the company's restructuring progresses make its forward valuation look quite attractive. That's no guarantee that the stock will rise further, but it gives Newell Rubbermaid a level of attractiveness that makes for a pretty picture for investors.

As for 3M, a long history of invention and innovation has driven the company to extensive growth, but a focus on operational efficiency may be hurting the creative culture that once created Scotch Tape and the Post-it Note. A new leader has taken over and vows to return innovation to the forefront. Does this mean the stock will become more than a dividend, returning to its former glory as a growth stock once again? Find out whether 3M has what it takes to pull it off in The Motley Fool's comprehensive new research report on the company. Simply click here now to claim your copy today.

Click here to add Newell Rubbermaid to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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