Newell Brands Inc. NWL stock has dropped 30.4% in the past month, significantly underperforming the broader industry’s 0.2% decline and the Consumer Staples sector’s 2.7% rise. The stock’s decline was exacerbated by weaker-than-expected fourth-quarter 2024 results. Revenues declined 6.1% year over year and missed the Zacks Consensus Estimate.
NWL Stock's Past Month's Price Performance
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Core sales declined 3%, driven by lower demand, business exits and unfavorable foreign exchange impacts. Given these challenges, investors may question whether Newell is a value opportunity or if further downside risks remain.
Highlights From NWL’s Q4 Results
Newell reported declines across all segments, with net sales in the Home & Commercial Solutions segment falling 7.7% year over year. Core sales dipped 4.6% due to weakness in the Kitchen and Home Fragrance businesses, partially offset by growth in Commercial.
The Learning and Development segment saw a 1.1% decline, as core sales grew 0.4% in Writing but fell in Baby, with foreign exchange also weighing on results. The Outdoor and Recreation segment posted a net sales decline of 7.9%, as core sales declined 3.8% and foreign exchange remained a headwind.
Despite the soft results, Newell benefited from strategic pricing actions in international markets to offset inflation and currency pressures, contributing positively to core sales. The company’s disciplined execution of its new corporate strategy, operating model and culture transformation has strengthened its front-end selling and marketing capabilities.
Newell’s normalized gross margin expanded 330 basis points year over year to 34.6%, marking its sixth consecutive quarter of improvement. Additionally, the normalized operating margin increased 70 basis points to 7.1%, signaling progress in operational efficiency and cost management.
NWL’s Plan Bodes Well
Newell’s solid execution of its corporate strategy focuses on innovation, brand-building and go-to-market excellence while driving efficiency through standardization and scale. Progress in new business development and expanded brand distribution has strengthened its International segment as a key growth driver.
NWL’s ongoing organizational realignment aims to enhance its commercial capabilities by strengthening consumer insights and brand communication. The company has implemented several structural changes, including a cross-functional brand-management organization, a streamlined global brand management model and the unification of various operational teams to drive efficiency under its “One Newell” approach.
As part of its 2024 Realignment Plan, Newell achieved annualized pretax savings of $75 million, net of reinvestment, while incurring restructuring and related charges of $52 million. These initiatives are expected to improve agility and long-term growth prospects despite near-term financial pressures.
NWL’s Bleak Outlook
The company anticipates 2025 sales to drop 2-4% year over year, with core sales expected to decline 2% to increase 1%. For the first quarter, net sales are envisioned to dip 5-8%, with core sales anticipated to drop 2-4%.
For 2025, the normalized operating margin is likely to be 9-9.5% compared with 8.2% recorded last year. Normalized EPS is predicted to be 70-76 cents, up from 68 cents reported in the last year. The company envisions operating cash flow of $450-$500 million.
How Estimates Stack Up for Newell Post Q4 Earnings
Following the soft fourth-quarter performance, the Zacks Consensus Estimate for NWL’s EPS has seen downward revisions. In the past 30 days, analysts have decreased estimates for earnings for 2025 and 2026 by 3.8% to 74 cents per share and 7.5% to 86 cents per share, respectively. However, the estimates suggest year-over-year increases of 8.8% and 15.3%, respectively.
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Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Investment Opinion on NWL Stock
Newell’s weak fourth-quarter performance and cautious 2025 guidance suggest limited near-term upside for the stock. The decline across all segments, ongoing demand softness and foreign exchange pressures create headwinds that could persist in the short term. However, the company’s strategic initiatives, including its Realignment Plan and operational improvements, position it for long-term recovery. Current investors should retain their positions in NWL stock, while new investors might wait for a more favorable entry point. Newell currently carries a Zacks Rank #3 (Hold).
Three Picks You Can't Miss
United Natural Foods, Inc. UNFI currently sports a Zacks Rank of 1 (Strong Buy). UNFI delivered a trailing four-quarter earnings surprise of 553.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s fiscal 2025 sales and earnings indicates growth of 0.3% and 442.9%, respectively, from the year-ago period’s reported figure.
TreeHouse Foods THS, a private brand snacks and beverages company, presently has a Zacks Rank #2 (Buy). THS delivered a trailing four-quarter earnings surprise of 17.8%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ 2025 sales and earnings implies growth of 1.6% and 16.7%, respectively, from the year-ago period’s reported figure.
US Foods Holding USFD, which engages in the marketing, sale and distribution of fresh, frozen, and dry food and non-food products, currently carries a Zacks Rank #2. USFD delivered a positive earnings surprise of 2.4% in the last reported quarter.
The consensus estimate for US Foods’ 2025 sales and earnings calls for growth of 5.3% and 21%, respectively, from the prior-year reported levels.
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United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
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US Foods Holding Corp. (USFD) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
