Newell Brands' Q1 Results Expected to Meet Views Amid Consumer, Tariff Concerns, RBC Says

Newell Brands (NASDAQ: NWL) is set to report its first-quarter 2025 earnings on Wednesday, April 30, with analysts and investors closely watching for signs of stabilization in its consumer goods portfolio amid ongoing economic headwinds. The company, which owns iconic brands like Rubbermaid, Sharpie, and Coleman, faces a challenging backdrop of soft consumer spending and rising tariff pressures. A recent RBC Capital Markets report underscores cautious optimism, reaffirming a Hold rating but leaving room for upside if results align with modest expectations.

RBC’s Cautionary Take

Analyst Nik Modi at RBC Capital Markets reiterated a Hold rating on Newell Brands on April 1, 2025, with a price target of $9.00. This assessment comes despite the stock’s recent rise to $10.17 by late December 2024, suggesting Modi views the shares as modestly overvalued near-term. His stance reflects skepticism about the company’s ability to offset rising costs and sluggish demand, particularly in its core home and office product categories. Modi’s track record—58.55% success rate on recommendations—adds credibility to his view, though broader analyst sentiment leans slightly more bullish.

Financial Outlook: Mixed Signals

Analysts project Q1 2025 EPS of $0.03 and revenue of $1.62 billion, marking a sharp -37.81% year-over-year decline in EPS growth compared to the S&P 500’s anticipated 5% growth. The weak EPS trajectory stems from higher interest expenses tied to Newell’s recent debt refinancing and margin pressures from tariffs. The company’s sales growth is also expected to slow to -5.16% year-over-year in the current quarter, underscoring challenges in its global supply chain.

Debt Refinancing and Strategic Priorities

In October 2024, Newell Brands announced a $1.25 billion debt offering to refinance existing obligations, including 4.875% notes due 2025 and 4.200% notes due 2026. While this move shores up liquidity, the new notes carry higher interest rates (6.375% and 6.625%), which could weigh on future earnings. Management has emphasized cost discipline and brand innovation to counter these headwinds, with a focus on high-margin products like Yankee Candle and Graco baby gear.

Risks to Watch in Q1 Results

1. Consumer Spending Trends: With inflation still elevated and discretionary budgets strained, Newell’s exposure to household and office products makes it vulnerable to spending cuts.
2. Tariff Exposure: Roughly 20% of Newell’s products are sourced from China, leaving it exposed to trade tensions. Management will likely face questions about pricing strategies and supply chain resilience.
3. Margin Pressures: Analysts will scrutinize gross margin trends, as input costs and logistics expenses remain elevated.

Analyst Consensus: A Moderate Buy

While RBC’s Hold rating stands out, the broader analyst community maintains a “Moderate Buy” consensus, with an average price target of $10.03—implying a 59.97% upside from April’s lows. Wells Fargo’s $7.00 price target highlights the polarized views, with bulls arguing that Newell’s brand portfolio offers long-term value.

Conclusion: A Hold with Room for Upside

Newell Brands’ Q1 results are unlikely to surprise meaningfully, given the low bar set by consensus estimates. While RBC’s cautious stance is justified given the macroeconomic risks, the stock’s recent rebound to $10.17 suggests investors are betting on stabilization. Key data points to watch include:
- EPS vs. $0.03 estimate: A miss could pressure shares, while a beat might narrow the gap to RBC’s $9 target.
- Revenue trends: A sequential decline from Q4’s $1.95 billion would raise concerns about demand.
- Debt costs: Management’s ability to contain interest expenses will be critical to long-term profitability.

For now, the stock appears fairly valued at current levels, with RBC’s Hold rating reflecting the cautious balance between Newell’s brand strength and its operational challenges. Investors should look for clarity on margin recovery and consumer resilience in the April 30 webcast to determine whether this hold turns into a buy.