Investment Analysis Report: Newell Brands Inc. (NWL)

Overview:

Newell Brands Inc. (NWL) operates in the Producer Manufacturing sector, specifically in the Industrial Conglomerates industry. The company has a market capitalization of $3.18 billion. In this report, we will conduct a comprehensive analysis of NWL's financial health, earnings and revenue growth, profitability, operating margin, operating cash flow, capital expenditure trends, and efficiency.

Balance Sheets Analysis:

Key Observations:

• Retained Earnings: The retained earnings have shown a decreasing trend over the past three years, indicating potential challenges in generating profits and retaining them within the company.
• Total Liabilities and Total Debt: Both total liabilities and total debt have decreased slightly over the years, which is a positive sign as it indicates a reduction in the company's debt burden.
• Net Working Capital: The net working capital has remained relatively stable over the years, indicating that the company has been able to efficiently manage its current assets and liabilities.
• Goodwill and Intangible Assets: The goodwill and intangible assets have remained constant, which could indicate that the company has not made significant acquisitions or write-offs in recent years.

Opinions:

• The decreasing trend in retained earnings is a concern as it may indicate challenges in generating profits and retaining them within the company.
• The reduction in total liabilities and total debt is a positive sign as it indicates improved financial stability and reduced debt burden.
• The stable net working capital reflects efficient management of current assets and liabilities, which is crucial for the company's liquidity and operational efficiency.

Income Statements Analysis:

Key Observations:

• Total Revenue: The total revenue has fluctuated over the past three years, with a slight decrease in 2022 compared to 2021.
• Net Income: The net income has shown variability, with a significant decrease in 2022 compared to 2021.
• Operating Margin: The operating margin has fluctuated over the years, with a negative margin in 2020 and a positive margin in 2021 and 2022.
• Earnings Per Share (EPS): The EPS has also shown variability, with a significant decrease in 2022 compared to 2021.

Opinions:

• The fluctuating total revenue and net income indicate potential challenges in maintaining consistent profitability and revenue growth.
• The variability in operating margin and EPS reflects the company's struggle to maintain stable profitability and operational efficiency.

Cashflow Statements Analysis:

Key Observations:

• Operating Cash Flow: The operating cash flow has shown variability over the years, with a negative cash flow in 2022.
• Free Cash Flow: The free cash flow has also fluctuated, with a negative free cash flow in 2022.

Opinions:

• The variability in operating cash flow and free cash flow indicates potential challenges in generating sufficient cash flow from operations and maintaining liquidity.
• The negative free cash flow in 2022 raises concerns about the company's ability to fund its operations and investments.

Investment Analysis and Recommendations:

Based on the analysis of NWL's financial statements, it is evident that the company is facing challenges in maintaining consistent profitability, revenue growth, and cash flow generation. The decreasing trend in retained earnings, fluctuating total revenue and net income, and negative free cash flow in 2022 highlight the company's financial struggles.

Valuation:

• The market capitalization of $3.18 billion reflects the company's current market value. However, the fluctuating financial performance raises concerns about the company's valuation.

Financial Health:

• The reduction in total liabilities and total debt is a positive sign for the company's financial health. However, the decreasing trend in retained earnings and negative free cash flow in 2022 indicate potential financial challenges.

Earnings and Revenue Growth:

• The fluctuating total revenue and net income suggest challenges in maintaining consistent earnings and revenue growth. The variability in operating margin and EPS further highlight the company's struggle in this area.

Profitability:

• The fluctuating operating margin and net income indicate challenges in maintaining stable profitability. The negative operating margin in 2020 and negative net income in 2022 are concerning signs for the company's profitability.

Operating Margin and Operating Cash Flow Analysis:

• The variability in operating margin and negative operating cash flow in 2022 indicate potential inefficiencies in the company's operations. The company may need to focus on improving operational efficiency to enhance profitability.

Capital Expenditure Trends and Efficiency:

• The fluctuating capital expenditure trends and negative free cash flow in 2022 suggest that the company may need to reassess its investment decisions and capital allocation strategies. Improving capital expenditure efficiency could help enhance cash flow generation and overall financial performance.

Investment Recommendation:

Based on the analysis of NWL's financial statements and key trends, it is recommended to approach investment in NWL with caution. The company's financial struggles, including fluctuating profitability, revenue growth, and cash flow generation, raise concerns about its long-term sustainability. Investors should closely monitor the company's financial performance and operational efficiency before making any investment decisions.

Viewpoint: [Negative]

In conclusion, the analysis of Newell Brands Inc. (NWL) reveals challenges in maintaining consistent profitability, revenue growth, and cash flow generation. The company's financial struggles, including fluctuating financial performance and negative free cash flow, raise concerns about its financial health and long-term sustainability. Investors should exercise caution and closely monitor the company's financial performance before considering any investment in NWL.