Markets & Finance

Banc of America Cuts Newell Rubbermaid to 'Sell'

Banc of America downgraded Newell Rubbermaid (NWL) to sell from neutral.

Analyst William Steel says Newell is projected to have taken almost $1.3 billion in after-tax charges from 2001 through 2004. This represents 85% of net income and 40% of cash flow over that time. He notes that $1.15 2001 GAAP EPS is projected to fall to 88 cents in 2004. Also, he notes cash flow from operations has fallen 26%, from $903 million in 2001 to a projected $665 million in 2004.

Steel contends its market multiple is too high. While his estimates are below guidance, he still finds that an 18 multiple for a company with little organic sales growth, falling EPS, and lower cash flow is not a value. He cut his $22 price target to $19.

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