Newell Brands Inc. (NWL) had a good Friday. The consumer products company behind brands like Sharpie, Rubbermaid, and Graco reported second-quarter results that blew past expectations, raised its full-year outlook, and gave third-quarter revenue guidance that topped Wall Street's numbers. Shares jumped nearly 15%.
But there's another force at play here: short interest. With 21.65% of the float sold short, the stock was ripe for a squeeze. When good news hits, short sellers rush to cover, and that buying pressure can send shares soaring even higher. Friday's move looks like a classic short squeeze amplified by a solid earnings report.
Earnings Beat Driven by Tariff Recoveries
Second-quarter net sales rose 3% year over year to $1.994 billion, edging past the consensus estimate of $1.978 billion. Core sales, which strip out currency and other factors, were up 2.3%.
The real headline, though, was the bottom line. Adjusted earnings came in at 42 cents per share, more than double the 20 cents analysts were expecting. Normalized operating margin expanded to 16.2% from 10.7% a year earlier, and normalized EBITDA jumped to $406 million from $280 million.
What drove the big beat? Tariffs, believe it or not. The company said results included about $126 million in pretax tariff recoveries related to IEEPA tariffs, contributing roughly 21 cents per share to adjusted earnings. That's a significant chunk of the earnings surprise.
Learning Segment Leads Growth
Not all segments performed equally. The Learning & Development segment, which includes Baby and Writing products, was the star. Net sales rose to $851 million from $809 million a year earlier, with core sales up 4.9%. Growth was broad-based, supported by both Baby and Writing businesses, plus a little help from favorable foreign exchange.
Home & Commercial Solutions posted net sales of $903 million, up from $892 million. Core sales dipped 0.4%, but favorable currency offset that. Strength in Kitchen and Home Fragrance was partially offset by weakness in the Commercial business.
Outdoor & Recreation, the smallest segment, saw net sales of $240 million versus $234 million a year ago. Core sales increased 3.7%, though unfavorable foreign exchange took some of the shine off.
Cash Flow Improves, Debt Remains Elevated
Cash flow is heading in the right direction. Year-to-date operating cash outflow improved to $204 million from $271 million in the prior-year period, thanks to better working capital management and lower incentive compensation payments.
But the balance sheet still carries weight. As of the end of the second quarter, Newell had $5.0 billion in total debt and $209 million in cash and cash equivalents. That's a lot of leverage, but the improved cash flow is a positive sign.
Company Raises 2026 Guidance
Looking ahead, Newell raised its full-year adjusted earnings guidance to 73 cents to 77 cents per share, up from the previous range of 56 cents to 60 cents. That's well above the analyst consensus of 58 cents. The company also lifted its full-year revenue forecast to $7.276 billion to $7.348 billion, compared with its prior outlook of $7.204 billion to $7.348 billion. The new range brackets the consensus estimate of $7.287 billion.
For the third quarter, Newell expects adjusted earnings of 18 cents to 20 cents per share, versus the 20-cent consensus. Revenue is forecast at $1.842 billion to $1.860 billion, above the $1.841 billion analysts were looking for.
NWL Price Action: Newell Brands shares were up 14.98% at $5.91 at the time of publication on Friday, according to market data.
