Newell Brands Inc. (NYSE: NWL) has seen a negative reaction to its earnings report and guidance. This may be a disappointment for a stock that already has fallen, but the reality is that this should be little to no real surprise if value investing methods were used in evaluating earnings ahead of time.

24/7 Wall St. recently included Newell Brands in a review of seven value stocks that looked to be dirt cheap for later in 2017 or into 2018. Value investors know that stocks that look cheap are almost always cheap for a reason. There was little reason that investors should have felt optimistic going into earnings.

While Newell Brands raised its annual earnings guidance, revenue of $4.14 billion was short of the $4.27 billion consensus estimate. The report of $0.80 in earnings per share met estimates. This consumer products company is now targeting earnings of $2.95 to $3.15 per share, which is better than a prior range of $2.85 to $3.05 and better at the mid-point than the consensus estimate of $3.00.

Newell Brands was trading closer to $47.50 last week, and its shares were last seen down 5.3% at $44.45 after earnings. Its consensus analyst price target was $57.31 ahead of earnings, according to Thomson Reuters. If the analysts do not lower their forecasts too much on Tuesday and later on this week, then it will still imply more than 20% upside remains. Newell Brands also has better than a 1.6% dividend yield, and its shares had been up about 6% so far in 2017 ahead of earnings, even if they were up 12% in the past six months.

Newell’s roster of products and brands hardly needs an introduction. These brands include the top Newell and Rubbermaid brands, as well as key brands like Paper Mate, Sharpie, Elmer’s, Rawlings, Sunbeam, Graco, Calphalon, Yankee Candle and many more.

Merrill Lynch recently named Newell Brands among five cheap stocks for an expensive market. Again, cheap stocks are cheap for a reason. The company’s core sales growth was just 2.5% in the fourth quarter. Its revised guidance for full year 2017 core sales growth is now 2.5% to 4.0%, rather than the initial 2017 guidance of 3.0% to 4.0%.

One issue that keeps pressing down on the company’s shoulders is its ongoing effort to simplify and strengthen its brand portfolio. This means that it is divesting from its portfolio of brands to create a more solid core that can be focused on for size and for growth in the years ahead. Unfortunately, these transitionary periods can be rather difficult for shareholders to understand. After all, how is a company growing if it is shrinking itself? One other concern may be the border adjustment tax. This effort could hurt American companies bringing in goods made overseas to sell to Americans.

Newell Brands shares have a 52-week trading range of $33.26 to $55.45. After Monday’s 4% drop, the stock is now down 20% from the 52-week high. Where this story gets interesting for 2017 and beyond is that the shares are now valued at just 14.6 times expected 2017 earnings, down from less than 16 times just a week earlier. Its market cap of $21.4 billion should keep the company quite relevant for years to come.

Monday’s reaction to earnings feels as though it is a bit extreme, considering that shares were already handily lower from its highs. That being said, value investors know that “value” usually translates to “problems for today, promises for tomorrow.”

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Newell Brands Chief Executive Officer Michael Polk had a rather lengthy quote to describe the ongoing efforts to right-size its brands:

Our fourth quarter results reflect continued strong progress in the company’s transformation. We delivered over 40 percent earnings per share growth and nearly $1 billion of operating cash flow, driven by accelerating cost savings from synergies and Project Renewal. Despite significant portfolio and organization change in the quarter, core sales growth was competitive led by very good growth on Writing, Baby, Beverages, Waddington, Fishing, Team Sports and Technical Apparel. We delivered this outcome in the context of challenging mall-based retail conditions driven by accelerating bricks-to-clicks shopper migration during the holidays.

This has been one of the most transformative years in our history. In the context of unprecedented change, we have delivered very strong full year results with core sales growth of 3.7 percent and normalized earnings per share growth of nearly 33 percent. We have made tremendous progress on our strategic initiative to strengthen our portfolio, acquiring businesses with over $10 billion in revenue and divesting or holding for sale businesses with about $1.6 billion in revenue. Our progress on costs has enabled us to improve normalized operating margin by over 100 basis points while simultaneously investing for future growth by strengthening our capabilities in insights, design, innovation and ecommerce. And we have rapidly deleveraged our balance sheet, reducing gross debt by nearly $2.1 billion since the creation of Newell Brands on April 15, 2016. As we head into 2017, we are confident that we will continue to rapidly deleverage while simultaneously putting the building blocks in place to drive the growth acceleration and transformative value creation promised in the Growth Game Plan.

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