Long-established in the Consumer Packaged Goods industry, Newell Brands Inc (NWL, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 3.16%, juxtaposed with a three-month change of -16.65%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Newell Brands Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 6/10
- Growth rank: 2/10
- GF Value rank: 4/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned Newell Brands Inc the GF Score of 60 out of 100, which signals poor future outperformance potential.
Understanding Newell Brands Inc Business
Newell Brands Inc is an American global consumer goods company with a market cap of $3.046 billion and sales of $8.546 billion. The business activities of the group function through five segments namely, Commercial Solutions, Home Appliances, Home Solutions, Learning and Development, Outdoor and Recreation. The Learning and Development segment generates most of the revenue for the firm which offers baby gear and infant care products; writing instruments, including markers and highlighters, pens and pencils; art products; activity-based adhesive and cutting products, and labeling solutions. The company operates with a margin of 4.83%.
Financial Strength Breakdown
Newell Brands Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 1.56 positions it worse than 86.42% of 1362 companies in the Consumer Packaged Goods industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just 0.6, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.05 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 52.72, which is above Joel Tillinghast's warning level of 4 and is worse than 98.24% of 1362 companies in the Consumer Packaged Goods industry.
Growth Prospects
A lack of significant growth is another area where Newell Brands Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -0.4 per year over the past three years, which underperforms worse than 73.17% of 1711 companies in the Consumer Packaged Goods industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Newell Brands Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Newell Brands Inc has a rich history and a diverse product portfolio, its financial health and growth prospects raise concerns about its future performance. Investors should consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
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.
