Newell Brands (NWL) Stock Valuation After Recent Rebound And Mixed Long Term Returns

Recent share performance and business snapshot

Newell Brands (NWL) has drawn investor attention after a recent move in its share price, with the stock up 6.5% over the past day and about 32% year to date.

The move comes against a mixed longer term picture. The stock is roughly flat over the past year, with total returns declining about 33% over the past 3 years and about 76% over the past 5 years.

At a recent close of US$4.92 and a market value of about US$2.1b, Newell Brands sits in a value bucket score of 5. Its discounted cash flow model points to a sizeable intrinsic discount.

The company generated revenue of US$7,187.0m and reported a net loss of US$281.0m in its latest annual figures, alongside annual revenue growth of 1.8% and net income growth of 46.3%.

See our latest analysis for Newell Brands.

The recent 32.3% year to date share price return, including a 28.1% 30 day gain, contrasts with a flat 1 year total shareholder return and heavier losses over 3 and 5 years. This suggests short term momentum against a weak long term record.

If you are weighing what to do next after Newell Brands recent move, it can help to compare with other consumer exposed companies and discover 20 top founder-led companies

With the stock trading close to analyst targets yet sitting in a value bucket, and a discounted cash flow model pointing to a large intrinsic discount, is this a genuine buying opportunity or is the market already pricing in future growth?

Most Popular Narrative: 2.6% Undervalued

Newell Brands' most followed narrative puts fair value at about $5.05 per share, slightly above the recent $4.92 close, framing the stock as modestly undervalued on a discounted cash flow view.

Analysts have trimmed their price targets on Newell Brands, with cuts such as US$1 to US$6 and US$1 to US$4.25. These adjustments reflect ongoing concerns about topline pressure, a softer revenue trajectory and a slightly lower assumed future P/E multiple, even as margin expectations are adjusted higher.

Read the complete narrative.

Want to see what is sitting behind that small discount to fair value? The core of this narrative is a tension between cautious revenue assumptions, improving margin expectations and a future earnings multiple that sits below the wider Consumer Durables group.

Result: Fair Value of $5.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the story could shift quickly if core sales remain under pressure or if high leverage and interest costs limit the impact of Newell Brands' productivity efforts.

Find out about the key risks to this Newell Brands narrative.

Next Steps

With sentiment clearly mixed, this is a moment to move quickly, review the data for yourself, and weigh both the 3 key rewards and 2 important warning signs.

Looking for more investment ideas?

If you stop with just one stock, you could miss opportunities that suit your goals even better, so consider putting a few smart alternatives on your radar today.

• Scan for potential value opportunities by reviewing companies that screen well on quality and valuation using the 44 high quality undervalued stocks.
• Prioritise resilience by checking out the 71 resilient stocks with low risk scores and see which stocks stand out on lower risk scores.
• Hunt for lesser known opportunities with strong fundamentals through the screener containing 20 high quality undiscovered gems before other investors start paying attention.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com