Shares of Newell Brands Inc. NWL hit a new 52-week high of $11.58 yesterday before closing slightly lower at $11.51. Newell has seen its shares rise steadily in the past three months, driven by resilient business trends aided by its productivity and pricing actions. Its corporate strategy, which targets investing in innovation, brand-building, and go-to-market excellence across profitable brands and markets, bodes well.
In the past three months, NWL shares have rallied as much as 57.9% against declines of 1.6% and 4.6% recorded by the broader industry and the Zacks Consumer Staples sector, respectively. Meanwhile, the S&P 500 has risen 10.1% in the past three months.
NWL’s Three-Month Stock Performance
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This global manufacturer and marketer of consumer and commercial products currently trades above the 50-day and 200-day simple moving averages, signaling strong upward momentum and price stability. This technical strength indicates positive market sentiment and confidence in the leading beverage behemoth’s financial health and prospects.
Newell Stock Trades Above 50 and 200-Day Moving Average
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Breaking Down NWL’s Formula for Market Success
Newell has been enhancing its front-end commercial capabilities through consumer-driven innovations. Management plans to support and commercialize recently launched and upcoming innovations. The company is expanding Rubbermaid's popular Brilliance line, offering customizable size and shape options to meet consumer needs. Rubbermaid Commercial’s battery-powered motorized carts and tow trucks, designed for safer and more efficient heavy-load movement, have become one of its most successful launches, addressing key industry needs.
Looking ahead, Newell will continue investing in brands and supporting new MPP and HPP propositions. This includes Graco's SmartSense Soothing Bassinet and Swing, which quickly detects and responds to a baby’s cry with sound and motion, and Mr. Coffee Perfect Brew, a high-tech coffeemaker designed to help home brewers create barista-quality beverages. The innovative pot-free coffeemaker uses intelligent technology to optimize brewing for exceptional coffee and tea flavors.
Additionally, Newell introduced a versatile, food-safe handheld Plus vacuum sealer, the first cordless device combining handheld and countertop functions. These innovations are expected to drive sales and profitability growth.
Newell has been effectively executing its new corporate strategy, focused on prioritizing investments in innovation, brand-building, and go-to-market excellence for its most profitable brands and markets. It also emphasizes standardization and supply chain and back-office efficiencies. Since launching the strategy, Newell has delivered five consecutive quarters of results with sequential improvement in core sales growth. The company has also advanced its business development efforts, expanding brand distribution across new and existing retailers. Its international operations remain a significant growth driver.
Newell has also adopted a new operating model to enhance strategy execution by boosting organizational agility, effectiveness, and fostering a high-performing, innovative culture. The Learning & Development unit achieved core sales growth for the third consecutive quarter, driven by gains in the Baby segment.
Undervalued NWL Stock: Is it an Opportune Time to Buy?
From a valuation perspective, NWL shares present an attractive opportunity, trading at a discount over historical and industry benchmarks. The recent pullback has brought Abercrombie's stock valuation to a level that appears more affordable and appealing.
The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 14.76X, reflecting a discount to the broader industry’s 22.7X multiple and its five-year high of 16.88X. It stands below the S&P 500’s average of 22.79X.
Trading much below its five-year high and industry peers, the current valuation appears more affordable and appealing, presenting an opportunity to accumulate shares. Newell’s current Value Score of A further validates its appeal.
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Are Potential Obstacles Looming for NWL Stock?
Newell’s Outdoor & Recreation segment, its smallest unit by revenue and profitability, remains the weakest performer and requires a turnaround. In the third quarter of 2024, the segment’s net sales dropped 20.8% year-over-year, while core sales declined 16.8%. To drive recovery, the company relocated this business to Atlanta and is investing in front-end capabilities to reignite growth.
The broader macroeconomic environment remains challenging for Newell, with elevated core inflation dampening demand for discretionary and durable goods. In the third quarter of 2024, net sales decreased 4.9% year over year, reflecting lower core sales, business exits and unfavorable foreign exchange impacts. Core sales fell 1.7% during the period.
The company expects continued pressure in the general merchandise market, projecting a low-single-digit decline for 2024. For the fourth quarter of 2024, net sales are forecast to drop 4-7% year over year, with core sales declining 2-5%, primarily due to foreign currency headwinds. Normalized operating margins are expected to range from 7% to 7.7%, with higher SG&A expenses and a slight increase in interest costs. Normalized EPS is projected at 11-14 cents, down from 22 cents in the prior-year quarter.
For the second half of 2024, core sales are anticipated to decline 2.5%. Full-year 2024 sales are expected to decrease 6-7%, with a core sales decline of 3-4%, reflecting category pressure and greater-than-expected foreign exchange headwinds. Normalized EPS for 2024 is projected at 63-66 cents, down from 79 cents in 2023.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
What Should Be Your Approach for NWL?
Investors face a crucial decision regarding Newell's investment potential. The company’s focus on innovation, brand-building, and go-to-market excellence continues to drive growth, supported by enhanced commercial capabilities and organizational effectiveness. However, ongoing challenges, such as unfavorable currency impacts and weak discretionary demand, remain a concern.
With its discounted valuation, Newell offers an attractive opportunity for long-term investors. However, near-term headwinds and a soft outlook may make some investors cautious. For current shareholders, holding this Zacks Rank #3 (Hold) stock could be a prudent move given its strong long-term prospects.
Key Picks
We have highlighted three better-ranked stocks, namely Clorox CLX, Tilray Brands TLRY and Leslies LESL.
Clorox, engaged in the production, marketing and sale of consumer products in the U.S. and international markets, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Clorox’s financial-year EPS indicates growth of 11% from the year-ago quarter’s figure. CLX delivered a trailing four-quarter earnings surprise of 45.9%, on average.
Tilray is a cannabis-lifestyle and consumer packaged goods company. TLRY currently carries a Zacks Rank #2. TLRY delivered a trailing four-quarter earnings surprise of 30%, on average.
The Zacks Consensus Estimate for Tilray’s current financial-year sales and EPS indicates growth of 22.6% and 57.6%, respectively, from the year-ago figures.
Leslies is a direct-to-consumer brand in the U.S. pool and spa care industry, serving residential, professional and commercial consumers. LESL currently has a Zacks Rank of 2.
The Zacks Consensus Estimate for Leslies’ current financial-year sales indicates growth of 3.1% from the year-ago quarter’s reported figure, while EPS indicates substantial growth year over year. LESL delivered a trailing four-quarter negative earnings surprise of 17.7%, on average.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
Tilray Brands, Inc. (TLRY) : Free Stock Analysis Report
Leslie's, Inc. (LESL) : 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.
