Newell's Innovations & Other Strategies Encouraging: Apt to Hold

Newell Brands Inc. NWL appears well-poised for growth on the back of its robust business strategies. Management has been evaluating opportunities to optimize the category mix and drive growth within each business unit. NWL’s corporate strategy is also encouraging.

Newell’s Strategic Efforts Aid

The company has been executing its corporate strategy, which aims at investing in innovation, brand-building and go-to-market excellence across its profitable brands and markets. It also focuses on achieving standardization and efficiencies within the supply chain and other office-related functions.

Newell is enhancing its front-end commercial capabilities through consumer-driven innovation. In the Baby business, the company introduced the Graco SmartSense Soothing Bassinet and Swing. This product detects and responds to a baby's cries with sound and motion. Its innovation pipeline remains on track. Management expects stronger top-line results in the back half of 2025 compared with the front half, given the timing of its innovation launches and distribution gains.

In addition, the company’s operating model, designed to accelerate the corporate strategy by driving organizational effectiveness and agility alongside developing a high-performing and innovative culture, is encouraging. Newell is making progress in its business development, enhancing its brand distribution.

Newell’s organizational realignment looks to strengthen its front-end commercial capabilities, including consumer understanding and brand communication. Apart from improving accountability, the Realignment Plan will unlock operational efficiencies and cost savings, lower complexity and free up funds for reinvestment.

Newell's priorities focus on improving margins by leveraging cost savings to offset inflation and marketing investments. The company also aims to reduce debt and improve cash flow while funding key restructuring projects to boost sustainable growth. It has secured notable wins in food storage and vacuum ceiling bags. Management expects lower commodity and input cost inflation, favorable foreign exchange, solid productivity results and select pricing efforts to offset the elevated tariff costs.

Bumps in NWL’s Growth Story

Newell has been witnessing a challenging macroeconomic environment and the cumulative impact of inflation. This has led to muted demand for discretionary and durable products. It has also been grappling with sluggishness in its Outdoor & Recreation segment for a while. Additionally, factors like the rising U.S. dollar, changing tax policies and potential tariffs add complexity to the business landscape.

NWL’s sensitivity analysis highlights that if the 125% tariff rate is in effect for the full year and is not mitigated, it might lower its 2025 normalized earnings per share (EPS) by nearly 20 cents. The company anticipates 2025 sales to drop in the range of 2-4% year over year. It now expects core sales to decline 1-3% compared with the earlier anticipation of a 2% decrease to a 1% increase. 

For the second quarter, both the net sales and core sales are expected to dip in the range of 3-5%. The company expects a normalized EPS in the band of 21-24 cents, down from 36 cents earned in the year-earlier quarter. It now expects category growth to drop 1-2%, given the soft consumer confidence levels and more muted macroeconomic expectations.

Conclusion

Newell’s aforesaid strategic initiatives will continue to deliver growth ahead. Strategic pricing in the international markets has considerably mitigated inflation and currency translation impacts. In the past month, shares of this manufacturer and marketer of consumer and commercial products have risen 10.2% compared with the industry’s 2.6% growth.

The Zacks Consensus Estimate for EPS is currently pegged at 69 cents for 2025 and 71 cents for 2026. These estimates indicate growth of 1.5% and 2.6%, respectively, year over year. NWL currently carries a Zacks Rank #3 (Hold).

Stocks to Consider in the Consumer Staples Space

Nomad Foods NOMD, which manufactures frozen foods, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NOMD delivered a trailing four-quarter earnings surprise of 5%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year EPS indicates growth of 3.1% from the year-ago number.
 

United Natural Foods UNFI, which is a distributor of natural, organic and specialty food in the United States, currently carries a Zacks Rank #2 (Buy).

UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average. The Zacks Consensus Estimate for UNFI’s current financial-year sales and EPS indicates growth of 1.9% and 485.7%, respectively, from the year-ago numbers.
 
Utz Brands UTZ manufactures salty snacks under popular brands and has a Zacks Rank of 2 at present. UTZ delivered a trailing four-quarter average earnings surprise of 8.8%.
 
The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.2% and 10.4%, respectively, from the year-ago numbers.

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This article originally published on Zacks Investment Research (zacks.com).

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