Newell Brands Inc (NWL, Financial), a prominent player in the consumer packaged goods industry, has recently witnessed a significant uptick in its stock performance. Over the past week, the company's stock price has surged by an impressive 34.71%, and over the last three months, it has gained 11.90%. Currently, the market capitalization stands at $3.55 billion with a stock price of $8.56. According to GuruFocus, the GF Value of NWL is $11.63, suggesting that the stock is modestly undervalued. This is a shift from three months ago when the GF Value was higher at $14.74, and the stock was considered a possible value trap.
Overview of Newell Brands Inc
Newell Brands Inc operates through three key segments: Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation. The Learning and Development segment, in particular, is a significant revenue driver, offering products ranging from baby gear and infant care to writing instruments and art products. This diversified portfolio helps Newell maintain a stable footing in the dynamic consumer goods sector.
Assessing Profitability
Newell Brands Inc holds a Profitability Rank of 6/10. The company's Operating Margin is 4.91%, which is better than 49.81% of its peers in the industry. However, it struggles with a Return on Equity (ROE) of -9.24% and a Return on Assets (ROA) of -2.34%, indicating challenges in generating profits from shareholders' equity and total assets, respectively. The Return on Invested Capital (ROIC) stands at 2.37%, which, while modest, suggests some efficiency in using capital to generate earnings. Over the past decade, Newell has been profitable for seven years, showcasing a relatively stable financial base amidst industry challenges.
Growth Trajectory and Challenges
The company's Growth Rank is notably low at 1/10. Newell has experienced a decline in revenue, with a 3-year revenue growth rate per share of -3.90% and a 5-year rate of -1.00%. Similarly, the 3-year and 5-year EPS without NRI growth rates are -10.70% and -5.00%, respectively. These figures highlight significant challenges in maintaining and boosting earnings, reflecting broader industry pressures and possibly internal inefficiencies.
Significant Shareholders
Noteworthy shareholders include Richard Pzena (Trades, Portfolio), holding 53,791,092 shares, representing 12.96% of the company, and PRIMECAP Management (Trades, Portfolio) with 11,939,172 shares. Additionally, Jim Simons holds a smaller stake of 935,787 shares. These major investors likely see long-term value in Newell's diverse portfolio and market position.
Competitive Landscape
Newell Brands Inc competes with companies like Spectrum Brands Holdings Inc (SPB, Financial), Helen Of Troy Ltd (HELE, Financial), and Edgewell Personal Care Co (EPC, Financial), with market caps of $2.42 billion, $1.29 billion, and $1.99 billion, respectively. This competitive environment demands continuous innovation and operational efficiency from Newell to maintain and enhance its market share.
Conclusion
In conclusion, Newell Brands Inc's recent stock price rally can be attributed to its modest undervaluation and diverse product range. However, the company faces significant challenges in profitability and growth, as reflected in its financial metrics. Investors should consider both the potential upsides and the risks associated with Newell's current market position and financial health. The strategic focus on key segments and operational improvements will be crucial for sustaining growth and profitability in the competitive consumer goods landscape.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
