Newell Rubbermaid Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were unable to contain their enthusiasm today after Newell Rubbermaid (NYS: NWL) reported better-than-expected earnings. The stock popped 11% in intraday trading even though the company lowered guidance.

So what: Second quarter non-GAAP EPS of $0.46 fell 10% year over year but was 10% above the consensus estimate. GAAP EPS of $0.49 grew 20% from the year-earlier quarter. Revenue of $1.57 billion increased 5% year over year and was slightly above the consensus forecast of $1.55 billion. An increase in sales volume, favorable pricing, and lower interest expense were more than offset by higher input costs and SG&A expenses, dragging down earnings.

Now what: The company's new CEO said earnings were "tempered by difficult U.S. and European economies and the ongoing challenges in the baby and parenting category." Non-GAAP EPS guidance for 2011 was lowered to a range of $1.55 and $1.62 from a range of $1.60 to $1.67. That straddles the consensus estimate of $1.58; many may have expected guidance to be lowered further than it was. What's more, the solid second-quarter EPS beat suggests that the new CEO may guide conservatively, leaving room for upside.  

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At the time this article was published Fool contributor Cindy Johnson owns no shares of any company named above. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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