US Reshoring And E-Commerce Trends Will Unlock Sustainable Demand

Key Takeaways

• Expanded U.S./Mexico manufacturing capacity and automation create enduring supply and cost advantages, enabling robust market share gains and sustained margin growth as reshoring intensifies.
  
• Strategic innovation, premiumization, omni-channel investment, and sustainability initiatives position Newell for leadership in high-value categories and improved margin resilience globally.
  
• Long-term growth and profitability are challenged by weak demand, operational complexity, intensifying competition, retailer consolidation, and constrained investment capacity due to high debt.

Catalysts

Engages in the design, manufacture, sourcing, and distribution of consumer and commercial products worldwide.

• Analysts broadly agree that Newell's domestic manufacturing and automation investments will provide tariff protection and a margin advantage, but the market underappreciates that Newell now possesses significant untapped, scalable U.S./Mexico manufacturing capacity, enabling rapid share gains as reshoring accelerates, giving it an enduring, structural cost and supply advantage that could drive robust revenue growth and further margin expansion for years.
  
• While analyst consensus sees innovation launches as driving a moderate return to core sales growth, they underestimate the impact of Newell's multi-year innovation overhaul-now supported by rebuilt brand management and consumer insights functions-which positions the company for a step-change in category leadership, enabling outsized gains in premium segments, accelerating revenue growth, and yielding sustained gross margin upside due to higher average selling prices.
  
• Newell's increasing omni-channel and direct-to-consumer focus, underscored by substantial e-commerce and digital investment, is set to unlock rapidly expanding global consumer access; as digital penetration in consumer goods rises, this could drive both higher volumes and improved overall margins due to reduced reliance on traditional retail intermediaries.
  
• With growing middle-class demand and premiumization opportunities across international markets-especially after record-setting product launches in core geographies like Latin America and Japan-Newell stands to meaningfully grow its global sales mix, generating both revenue growth and improved earnings through international operating leverage.
  
• The company's deepening commitment to ESG and sustainability, evidenced by eco-friendly product innovations and credible lifecycle initiatives in brands such as Rubbermaid and Yankee Candle, is likely to attract increasingly sustainability-focused consumers, supporting greater pricing power and customer loyalty, directly contributing to improved revenue resilience and higher long-term margins.

Newell Brands Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Newell Brands compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Newell Brands's revenue will grow by 1.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -3.3% today to 7.7% in 3 years time.
• The bullish analysts expect earnings to reach $606.1 million (and earnings per share of $1.44) by about August 2028, up from $-243.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 9.0x on those 2028 earnings, up from -10.0x today. This future PE is lower than the current PE for the US Consumer Durables industry at 11.9x.
• Analysts expect the number of shares outstanding to grow by 0.75% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Newell Brands Future Earnings Per Share Growth

Risks

• Persistent category softness and weak demand growth in general merchandise and consumer durables, driven by pressured consumer cohorts and broader macro headwinds, may limit Newell's ability to grow revenue in the long term.
  
• Ongoing high operating complexity from Newell's large, diversified brand portfolio continues to result in elevated SG&A and overheads, which, despite absolute dollar reductions, remain a drag on net margins and make further meaningful margin expansion difficult.
  
• Rising retailer influence and consolidation, particularly from dominant channels like Amazon and Walmart, increases pricing pressure and negotiation leverage, which risks future margin compression for Newell's branded products.
  
• The shift to e-commerce and proliferation of private label brands by major retailers and digital-native entrants intensifies competitive pressure, threatening Newell's market share and undermining both pricing power and long-term revenue prospects.
  
• Elevated debt levels and higher net interest expense, stemming from past acquisitions and new refinancing, continue to constrain Newell's capacity to invest in innovation and growth initiatives, putting further pressure on net income and limiting upside potential.

Valuation

• The assumed bullish price target for Newell Brands is $9.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Newell Brands's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $9.0, and the most bearish reporting a price target of just $5.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $7.8 billion, earnings will come to $606.1 million, and it would be trading on a PE ratio of 9.0x, assuming you use a discount rate of 12.3%.
  
• Given the current share price of $5.78, the bullish analyst price target of $9.0 is 35.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.