Newell Brands Inc. NWL stock has been doing well on the bourses, recording a gain of 61.7% in a year. This gain comfortably outpaces the broader Consumer Staples sector’s rise of 1.6% and the Zacks Consumer Products - Staples industry’s growth of 3% in the same period. NWL’s shares also surpassed the S&P 500 index’s appreciation of 11.6% in a year.

The company has been executing its corporate strategy, which aims at investing in innovation, brand-building and go-to-market excellence across its brands and markets. Let’s delve deeper.

Newell’s Strategies Aid the Rally

NWL is focused on achieving standardization and scale efficiencies within the supply chain and back-office functions. In addition, the company has transitioned into a new operating model, designed to accelerate the new strategy by driving organizational effectiveness and agility apart from developing a high-performing and innovative culture.

Newell has been making progress in its business development, enhancing its brand's distribution across the new and present retailers. The company’s International business continues to be a key growth driver. It has been strengthening its front-end commercial capabilities through consumer-driven innovations.

The company looks forward to making brand investments and 360-degree support for new MPP HPP propositions, comprising Graco's SmartSense Soothing Bassinet and Swing, which detects and responds to babies’ cries in seconds with a suing sound in motion. Further, Mr. Coffee Perfect Brew is Newell’s highly-advanced coffeemaker to aid home brewers make barista-quality beverages at home. Such innovations are likely to bolster sales and overall profitability.

Since the introduction of its corporate strategy, the company has witnessed improvement in the rate of core sales growth sequentially for five consecutive quarters in third-quarter 2024. The Learning & Development unit registered core sales growth for the third consecutive time in the reported quarter, on increases in the Baby businesses.

NWL Stock Price Performance

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NWL Stock’s Valuation

Newell stock is trading at an appealing valuation relative to the industry. Going by the price/earnings ratio, the stock is currently trading at 13.22 on a forward 12-month basis, lower than 22.29 for the industry. Also, the stock is trading lower than its median of 16.88.

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Bumps in NWL’s Growth Trajectory

The company has been struggling with sluggishness in its Outdoor & Recreation segment for a while now. In addition, Newell has been witnessing a challenging macroeconomic environment. Unfavorable foreign currency impacts and muted demand for discretionary products also remain concerns. 
 
Management anticipates the broader general merchandise market to be down low single digits in 2024. For the fourth quarter, net sales are envisioned to dip in the band of 4-7% year over year, with core sales anticipated to drop 2-5%, mainly owing to adverse foreign currency. The company expects normalized operating margin to be in the range of 7-7.7% for the quarter, with higher selling, general & administrative expenses in both dollars and as a percentage of sales.

Conclusion

Newell’s robust strategies will continue to deliver growth in the future. The Zacks Consensus Estimate for 2025 sales and earnings per share (EPS) is currently pegged at $7.6 billion and 77 cents, respectively. These estimates indicate corresponding growth of 0.3% and 18% year over year. NWL currently carries a Zacks Rank #3 (Hold).

Stocks to Consider in Consumer Staples Space

Freshpet, Inc. FRPT, a pet food company, has a trailing four-quarter average earnings surprise of 144.5%. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 27.2% and 228.6%, respectively, from the prior-year levels.

Vital Farms VITL, which provides pasture-raised products, currently sports a Zacks Rank of 2 (Buy). The consensus estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 27.2% and 88.1%, respectively, from the prior-year levels.

VITL has a trailing four-quarter average earnings surprise of 48.5%.

McCormick & Company MKC, manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2. MKC has a trailing four-quarter average earnings surprise of 13.8%.

The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 0.5% and 8.2%, respectively, from the year-ago figures.

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