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Bear of the Day: Newell Brands (NWL)

Newell Brands NWL is the consumer products firm behind Paper Mate, Elmer's, and much more. The company is coming off a down year in 2022 and it posted a larger-than-projected Q1 FY23 loss on April 28.

Newel’s near-term outlook remains weak as it faces slowing consumer spending, and its earnings revisions are trending in the wrong direction. NWL shares tumbled even deeper after its recent release, with it now down roughly 65% in the last two years.

The Newell Basics

Newell’s portfolio includes Paper Mate, Coleman, Rubbermaid, Sharpie, Yankee Candle, and more. The company posted a strong 2021 amid the post-covid spending boom, with sales up roughly 13%.

But things changed pretty quickly as shoppers began to pull back, with Newell’s 2022 revenue down nearly 11%. NWL’s adjusted earnings also slipped last year.

Newell on April 28 posted disappointing first quarter results that saw its revenue fall 24% YoY, with so-called core sales down 18%. The company also posted an adjusted loss of -$0.06 per share to fall just shy of our Zacks estimate. And NWL’s guidance disappointed Wall Street as NWL sees consumer discretionary spending coming under continued pressure.  

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Newell’s second quarter Zacks consensus estimate is down 54% since its release at the end of April, with its FY23 and FY24 estimates trending lower as well. The downbeat guidance and negative earnings revisions trends help NWL land a Zacks Rank #5 (Strong Sell) right now.

Zacks estimates call for Newell’s adjusted fiscal 2023 earnings to fall 38% YoY to $0.98 a share on another 10% lower revenue.

Bottom Line

Newell shares have tumbled roughly 65% in the last two years and are down almost the same amount over the past five years, compared to the S&P 500’s 55% climb.

Investors should also know that Newell is in the midst of a CEO transition. “The first quarter marked a pivotal period in the implementation of Project Phoenix and our new operating model is taking shape. I am pleased that Chris Peterson and I have partnered extremely well in ensuring a smooth CEO transition,” retiring chief executive Ravi Saligram said in prepared Q1 remarks.

“I remain optimistic about the future of the company and believe that Chris and the world-class management team we have assembled over the past few years will take Newell to the next level.”

Newell remains a solid firm and it boasts a huge dividend yield at the moment, which is made to look better by its falling share price. Some investors might want to keep NWL on their watchlists, but it is likely best to keep a bit of a distance for now. 

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Zacks Investment Research