Newell Brands Inc (NWL)

Newell Brands Inc. - A Comprehensive Overview

Company Profile

Detailed history and background:

Newell Brands Inc. (NASDAQ: NWL) is a global consumer goods company headquartered in Atlanta, Georgia. The company was founded in 1903 under the name Newell Rubbermaid before changing its name to Newell Brands in 2016. Through a series of acquisitions throughout its history, Newell Brands has become a leader in the home goods, personal care, and commercial products industries.

Core business areas:

Newell Brands operates through two segments:

• Home & Garden: This segment includes well-known brands like Rubbermaid, Sharpie, Paper Mate, Elmer's, Coleman, and Contigo, focusing on household and outdoor products.
• Commercial Products: This segment encompasses writing instruments, envelopes, labels, facility maintenance, and safety products under brands such as Sharpie, Expo, Parker, Dymo, Marvy, Elmer's, and Mapa Professional.

Leadership and corporate structure:

Newell Brands is led by Chief Executive Officer Ravi Saligram and President and Chief Operating Officer Christopher Peterson. The company operates with a decentralized structure, empowering individual business units to manage their specific segments and brands.

Top Products and Market Share:

Top Products:

• Rubbermaid: Known for household products like food storage containers, trash cans, and cleaning tools.
• Sharpie: Renowned for its permanent markers.
• Paper Mate: Famous for pens, pencils, and other writing instruments.
• Elmer's: Popular for school and office supplies, including glue and art materials.
• Coleman: Leading brand in camping equipment, grills, and outdoor gear.

Market Share:

• Rubbermaid holds the largest market share in the food storage container category in the US.
• Sharpie is the market leader in permanent markers globally.
• Elmer's commands a dominant market share in the glue and school supply segments in the US.
• Paper Mate is a major player in the pen and pencil market, competing with BIC and Pilot.
• Coleman holds a significant share in the camping equipment market, facing competition from brands like Yeti and Ozark Trail.

Total Addressable Market:

The total addressable market for Newell Brands is vast, encompassing various consumer product segments. The global market for household goods alone is estimated to be around $1.2 trillion, while the global market for stationery and office supplies is valued at roughly $250 billion.

Financial Performance:

Financial statements analysis:

• Revenue: Revenue for the fiscal year 2022 was $8.92 billion.
• Net Income: Net income for the fiscal year 2022 was $679 million.
• Profit Margins: Gross margin was 36.6%, and operating margin was 10.2% for the fiscal year 2022.
• Earnings per share (EPS): Diluted EPS for the fiscal year 2022 was $2.49.

Year-over-year comparison:

• Revenue increased by 0.6% compared to the fiscal year 2021.
• Net income decreased by 8.2% compared to the fiscal year 2021.
• Operating margin decreased by 1.9 percentage points compared to the fiscal year 2021.

Cash flow and balance sheet:

• Newell Brands had $769 million in cash and cash equivalents as of September 30, 2023.
• The company's total debt was $4.09 billion as of September 30, 2023.
• Newell Brands has a relatively strong balance sheet with a debt-to-equity ratio of 0.99.

Dividends and Shareholder Returns:

Dividend History:

• Newell Brands has a history of paying dividends, with a current annual dividend of $1.20 per share.
• The dividend yield is approximately 4.0% as of November 8, 2023.
• The payout ratio is around 48%.

Shareholder Returns:

• Newell Brand's stock price has decreased by approximately 7.5% over the past year but increased by 23% over the past five years.
• Total shareholder return, including dividends, has been 28% over the past five years.

Growth Trajectory:

Historical growth:

• Newell Brands has experienced modest revenue growth in recent years, with an average annual growth rate of 2.9% over the past five years.
• Operating margins have declined slightly during the same period.

Future growth projections:

• Analysts expect revenue to grow by 0.7% in 2023 and 2.5% in 2024.
• The company's focus on e-commerce, cost optimization, and innovation is expected to drive future growth.

Recent initiatives:

• Newell Brands has launched new products in key categories such as Rubbermaid Brilliance food storage containers and Sharpie S-Gel pens.
• The company is also investing in digital transformation and e-commerce platforms to improve customer experience and drive growth.

Market Dynamics:

Industry trends:

• The consumer goods industry is facing challenges from changing consumer preferences, increasing competition from online retailers, and supply chain disruptions.
• However, the industry is also benefiting from a growing middle class in emerging markets and increasing demand for convenient and sustainable products.

Newell Brands' positioning:

• Newell Brands is well-positioned in the consumer goods industry with strong brand recognition and a diversified portfolio of products.
• The company is focusing on innovation, cost reductions, and efficiency improvements to drive future growth.

Competitors:

Key competitors:

• Clorox (CLX)
• Procter & Gamble (PG)
• Spectrum Brands (SPB)
• BIC (BICEP)
• Pilot Corporation (PILOT)

Competitive advantages:

• Strong brand portfolio
• Diversified product offering
• Global reach
• Cost leadership

Competitive disadvantages:

• High debt levels
• Pressure from online retailers
• Declining margins in certain categories

Challenges and Opportunities:

Key Challenges:

• Supply chain disruptions
• Rising inflation
• Increased competition
• Declining margins in certain categories

Potential Opportunities:

• New product launches
• Expansion into new markets
• Focus on sustainability and e-commerce
• Strategic partnerships

Recent Acquisitions:

• Elmer's Products, Inc. (2018): This acquisition strengthened Newell Brands' position in the school and office supplies market.
• Rubbermaid Commercial Products (2019): This acquisition expanded the company's presence in the commercial cleaning and safety products segment.
• Clopay Corporation (2021): This acquisition diversified Newell Brands' portfolio and added garage doors to its product offerings.

AI-Based Fundamental Rating:

Overall rating: 7.5 out of 10

Justification:

• Newell Brands has a strong brand portfolio and market share in key product categories.
• The company has a diversified business model and exposure to various consumer segments.
• Newell Brands is focused on cost reduction and efficiency improvements while investing in new products and innovation.
• However, the company faces challenges from supply chain disruptions, rising inflation, and increasing competition.

Sources and Disclaimers:

• Information for this analysis was gathered from financial reports, company websites, press releases, news articles, and industry data sources.
• This information should not be considered financial advice. Please conduct your own research and consult with a qualified financial advisor before making any investment decisions.

Additional considerations:

• Newell Brands experienced significant market volatility and price changes during the pandemic.
• Supply chain disruptions and inflationary pressures continue to present challenges.

Conclusion

Newell Brands is a established consumer goods company with strong brands, a diversified portfolio, and a focus on growth. While facing challenges, the company possesses strong fundamentals and strategic positioning to navigate market dynamics and create future value for shareholders.