NEWELL RUBBERMAID INC. $18 (New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 289.9 million; Market cap: $5.2 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.2%; TSINetwork Rating: Average; www.newellrubbermaid.com) makes plastic storage bins, tools, window blinds, pens and a number of other household items. Its top brands include Rubbermaid, Sharpie, Paper Mate, Parker, Graco, Irwin, Waterman and Levolor.

The company has three divisions: Newell Consumer (which supplies 50% of Newell’s sales and 45% of its earnings); Newell Professional (35%, 40%) and Baby and Parenting (15%, 15%). Wal-Mart accounted for 11.0% of Newell’s sales in 2011.

The company’s sales rose 1.0%, from $6.4 billion in 2007 to $6.5 billion in 2008, but the recession lowered its sales by 13.8%, to $5.6 billion, in 2009. Sales rebounded by 3.3%, to $5.8 billion, in 2010, and climbed to $5.9 billion in 2011.

Earnings fell 54.1%, from $1.72 a share (or a total of $479.2 million) in 2007 to $0.79 a share (or $219.3 million) in 2008. The drop was largely due to record high oil prices, which pushed up the cost of plastic resin, a key raw material. In response, the company closed plants, merged warehouses and sold less profitable businesses, particularly those whose products include large amounts of plastic.

Newell also added more profitable products to its lineup, including through acquisitions. For example, in 2008 it paid $145.7 million for Japan’s Aprica Kassai Inc., which makes children’s products, including strollers and car seats.

Savings from the restructuring and new products increased Newell’s earnings by 22.8%, to $0.97 a share (or $285.5 million) in 2009. Earnings rose to $292.8 million in 2010, but per-share earnings dipped to $0.96 due to more shares outstanding. In 2011, earnings rose to $1.17 a share (or $336.3 million). Without unusual items, per-share earnings would have risen by 6.0%, to $1.59 in 2011 from $1.50 in 2010.

Two plans add up to big savings

Right now, Newell is taking a number of steps to restructure its European business, including centralizing purchasing and administrative functions. This will let it close some offices. This plan should add $55 million to $65 million to earnings by the end of 2012.

Earlier, in October 2011, Newell began a wider restructuring that involved consolidating plants and revamping its sales force. Before, each salesperson focused on an individual brand, but now they sell all of the company’s brands to various retailers.

This new approach helped Newell start selling plastic storage boxes to office-supply retailer Office Depot, in addition to the usual workplace supplies, such as Paper Mate pens.

Newell expects these improvements to cut its yearly costs by $90 million to $100 million by the end of 2012.

The company is already starting to benefit: in the three months ended March 31, 2012, Newell’s earnings rose 11.7%, to $97.1 million from $86.9 million a year earlier. Earnings per share rose 13.8%, to $0.33 from $0.29, on fewer shares outstanding. Sales gained 4.6%, to $1.33 billion from $1.27 billion.

The company will use most of these savings to develop new products. In 2011, it spent $130.1 million (or 2.2% of its sales) on research. That’s up 1.0% from $128.8 million (or 2.2% of sales) in 2010.

Newell is also investing more money in brands that offer the best growth prospects.

For example, it recently launched a new line of pens, called InkJoy, that write more smoothly than other pens because they use a low-viscosity ink. InkJoy pens accounted for about half of Paper Mate’s growth in the first quarter of 2012.

Opening the door to new markets

New products like InkJoy are also helping Newell expand internationally; markets outside of North America supplied 27% of its sales in 2011.

The company is particularly interested in fast-growing regions like Latin America, where rising prosperity is making its products more affordable. Newell feels these markets will supply 30% of its overall sales in five years, up from 15% now.

The company’s ongoing cost cuts have also let it cut its long-term debt from $2.1 billion in 2008 to $1.8 billion as of March 31, 2012. That’s a manageable 35% of its market cap. The company also held cash of $190.1 million, or $0.66 a share.

Excluding restructuring costs, Newell expects its cash flow to be between $550 million and $600 million in 2012. That gives it plenty of room to keep paying down its debt. Newell has also spent $62.5 million buying back its shares since August 2011. It aims to repurchase $300 million of its shares by August 2014.

Dividend moving up

Newell cut its annual dividend by 76.2%, from $0.84 a share in 2008 to $0.20 in 2009 to conserve cash during the recession. But its improving outlook has prompted it to raise its payout twice in the past year. The current annual rate of $0.40 yields 2.2%.

The company will likely earn $1.68 a share in 2012. The stock trades at just 10.7 times that estimate. It also trades at a low 9.9 times Newell’s projected 2013 earnings of $1.82 a share.

Newell Rubbermaid is a buy.