Newell Brands stock forecast after boosting FY2021 outlook

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 30, 2021
  • Newell Brands shares on Friday spiked more than 5% after announcing its most recent quarterly results.
  • The company reported its fiscal Q3 revenue and earnings before markets opened, beating analyst estimates.
  • Newell also boosted its FY2021 revenue and earnings forecast.

On Friday, Newell Brands Inc. (NASDAQ:NWL) shares gained more than 5% after announcing its most recent quarterly results. The company reported its fiscal third-quarter revenue and earnings before markets opened, beating the consensus for analyst expectations. Newell also boosted its FY2021 revenue and earnings outlook from the previous forecast.

The company posted FQ3 non-GAAP earnings per share of $0.54, beating the average for analyst estimates of $0.50. On the other hand, its GAAP earnings missed the expectation of $0.43, while revenue for the quarter increased marginally by 3.3% from the same period in 2020 to $2.79 billion, $10 million ahead of expectations.

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Moreover, Newell Brands now expects to post FY2021 revenue in the range of $10.38 billion to $10.46 billion from $10.1 billion to $10.35 billion previously. It also boosted normalised EPS guidance to $1.69-$1.73 from $1.63-$1.73.

Is Newell undervalued?

From an investment perspective, Newell Brands shares trade at a compelling trailing 12-month P/E ratio of 13.60 and a forward P/E of 12.21, making it an exciting option for value investors.

However, analysts forecast an EPS decline of about 513% this year, before recovering slightly by 8.76% next year. Therefore, growth investors may opt for alternatives in the market.

Source – TradingView

Technically, Newell shares seem to be trading within a descending channel formation in the intraday chart. However, the stock has recently bounced back to avoid falling into oversold conditions.

Therefore, with shares yet to reach the overbought conditions of the 14-day RSI, investors could target extended gains at about $24.01, or higher at $25.65, while $21.72 and $19.97 are crucial support zones.

Buy short-term?

In summary, although Newell Brands shares continue to trade under significant bearish pressure, Friday’s revenue and earnings beat triggered a significant rebound that could continue amid the compelling valuation multiples.

Therefore, although the long-term outlook looks less exciting, the current rebound could continue for the foreseeable future.

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