Newell Brands Undervalued by 37%: DCF Analysis

Newell Brands' fair value estimate is $9.97, with the company being 37% undervalued based on its current share price of $6.29. Our fair value estimate is 46% higher than Newell Brands' analyst price target of $6.83. We used the Discounted Cash Flow (DCF) model to estimate the intrinsic value of the company by discounting its future cash flows to their present value.

Newell Brands Inc. (NWL) continues to face significant challenges in its post-2025 strategic positioning. The company's Return on Invested Capital (ROIC) of 4.79% in Q2 2025 lags behind its Weighted Average Cost of Capital (WACC) of 7.51%, indicating a persistent weakness in capital allocation efficiency [1]. Additionally, the company's high debt-to-equity ratio of 1.68 and low cash ratio of 0.09 constrain reinvestment capacity and expose it to liquidity risks [6].

Despite these challenges, Newell has undertaken strategic restructuring, reducing its brand portfolio from 80 to 55 and focusing on high-return brands like Rubbermaid and Yankee Candle. This operational restructuring has boosted Q2 2025 gross margins to 35.4%, the highest in four years [4]. The company's emphasis on innovation and marketing, including Yankee Candle's rebranding and supply chain investments, has driven a global fill rate above 95% and positioned Newell to outperform in mid- to high-price segments [3].

However, external risks, such as tariffs and rising interest rates, threaten to erode Newell's margin gains. Tariff costs are expected to reduce 2025 gross profit by $105 million, or $0.21 per share after tax [5], while rising interest rates could erode normalized EPS by up to $0.10 if additional U.S. tariffs on China materialize [5]. These pressures underscore the fragility of Newell’s margin gains.

Looking ahead, Newell's 2026–2030 roadmap emphasizes disproportionate investment in its largest brands, expansion into fast-growing channels, and AI-driven supply chain optimization [1]. While these goals are ambitious, the absence of explicit market share targets post-2025 raises questions about execution clarity.

Newell Brands' fair value estimate is $9.97, with the company being 37% undervalued based on its current share price of $6.29. Our fair value estimate is 46% higher than Newell Brands' analyst price target of $6.83. We used the Discounted Cash Flow (DCF) model to estimate the intrinsic value of the company by discounting its future cash flows to their present value.

References:
[1] Newell Brands at 2025 dbAccess Conference [https://www.investing.com/news/transcripts/newell-brands-at-2025-dbaccess-conference-strategic-turnaround-insights-93CH-4079636]
[2] Newell Brands Updates Capital Allocation Strategy and Declares Quarterly Dividend [https://ir.newellbrands.com/news-releases/news-release-details/newell-brands-updates-capital-allocation-strategy-and-declares]
[3] Newell Brands Announces Second Quarter 2025 Results [https://www.newellbrands.com/our-stories/newell-brands-announces-second-quarter-2025-results]
[4] Newell Brands Q1 2025 slides: Turnaround strategy yields margin gains amid sales challenges [https://www.investing.com/news/company-news/newell-brands-q1-2025-slides-turnaround-strategy-yields-margin-gains-amid-sales-challenges-93CH-4012822]
[5] Newell Brands Announces Second Quarter 2025 Results [https://ir.newellbrands.com/news-releases/news-release-details/newell-brands-announces-second-quarter-2025-results]
[6] Ieq Capital LLC Acquires 496916 Shares of Newell Brands ... [https://www.marketbeat.com/instant-alerts/filing-ieq-capital-llc-has-383-million-stock-holdings-in-newell-brands-inc-nwl-2025-08-30/]