NWL Bearish Setup: AI Flags Potential Put Play

Newell Brands is a global consumer goods company offering a portfolio of well-known brands. Its core products span across three operating segments. 'Home and Commercial Solutions' provides kitchen appliances under brands like 'Crockpot' and 'Oster', food storage solutions such as 'Rubbermaid' and 'FoodSaver', cookware under 'Calphalon', home fragrance via 'Yankee Candle', and commercial cleaning solutions through 'Rubbermaid Commercial Products'. The 'Learning and Development' segment offers writing instruments like 'Sharpie' and 'Paper Mate', art supplies, and baby gear including 'Graco' and 'NUK'. 'Outdoor and Recreation' provides active lifestyle products under brands such as 'Coleman' and 'Campingaz'. Newell Brands targets a wide range of customers including mass merchants, warehouse clubs, department stores, e-commerce retailers, and specialty retailers. The company's strategy focuses on improving front-end capabilities, investing in key brands and channels, leveraging scale for cost savings, and transitioning to a high-performance organization.

The short-term outlook for Newell Brands (NWL) is negative. Several analysts have cut their forecasts and lowered price targets following weak earnings. This widespread downward revision suggests a lack of confidence in the company's near-term performance. Citigroup lowered its price target significantly, from $5.5 to $3.5, while maintaining a Neutral rating. Other firms, including JP Morgan, RBC Capital, and Canaccord Genuity, also reduced their price targets, despite maintaining their original ratings (Overweight, Sector Perform, and Buy, respectively). The consensus appears to be that NWL faces headwinds, and its stock price is likely to decline or, at best, remain stagnant in the next 1-2 weeks. The weak earnings report, coupled with the analysts' reactions, indicates a bearish sentiment surrounding the stock. Options traders should consider strategies that profit from a potential price decrease.

NWL's technical outlook is decidedly bearish. The stock has experienced a significant downtrend over the past 90 days, evidenced by the steep decline in price from approximately $6.39 in early September to $3.145 as of November 4th. Key moving averages confirm this bearish trend; the price is well below its 50-day SMA (5.3289) and 200-day SMA (5.8943), with the 21-day EMA also trending downwards at 4.7116. Momentum indicators reinforce the negative sentiment: The RSI is extremely oversold at 14.39, and the MACD is deeply negative at -0.3401, substantially below its signal line. The ADX at 25.35 indicates a strong trend, further supporting the bearish outlook. Stochastic Oscillator confirms the oversold conditions with STOCHk at 9.46 and STOCHd at 24.65. Bollinger Bands show the price trading far below the lower band, signaling a potential for continued downward movement. Given these strong bearish signals across multiple indicators, further declines are highly probable over the next 1-3 months.

Newell Brands' MD&A reveals a challenging operational landscape. For the three months ended September 30, 2025, 'Net sales' decreased by 7.2% to $1,806 million, primarily due to 'continued softness in global demand' in the H&CS segment and reduced retailer inventory levels. The 'Gross profit' margin declined from 34.9% to 34.1%, impacted by lower sales volume and additional tariffs of approximately '$55 million', and a '$6 million' product recall, partially offset by productivity and pricing actions. For the nine months ended September 30, 2025, 'Net sales' decreased by 5.8% to $5,307 million. 'Net cash provided by operating activities' decreased from $346 million to $103 million for the nine-month period, reflecting higher working capital requirements and the cash impact of additional tariffs. The company anticipates an incremental cash tariff cost of approximately '$180 million' in 2025. While the company is implementing a turnaround plan and cost-saving initiatives, it faces challenges including 'shifting consumer preferences', 'macroeconomic and geopolitical volatility', and 'significant cumulative inflationary pressures on consumers'. The company also faces approximately '$115 million' of incremental costs of products sold in 2025 due to tariffs.

The Newell Brands Q2 2025 earnings call strikes a moderately bullish tone, with management emphasizing operational improvements and strategic initiatives, despite some top-line headwinds. CEO Chris Peterson stated that Newell 'demonstrated tremendous agility' and achieved results 'in line with expectations across all financial metrics.' While core sales declined 4.4%, slightly below their operating plan, the company highlights that this was due to category softness and retailer actions. They are securing incremental business in 13 of 19 categories with domestic manufacturing. The company is updating its full-year core sales guidance to reflect category growth expectations at the low end of their prior range, offset by better foreign exchange, resulting in net sales in the top half of the prior range. CFO Mark Erceg noted normalized gross margin expanded by 80 basis points to 35.6%, the highest in 4 years, and normalized operating margin increased 10 basis points to 10.7%. The company expects sequential top-line progress to resume, based on distribution gains, innovation launches, and marketing programs, and remains on track to expand normalized operating margins and grow normalized earnings per share on a tax equalized basis by double digits.

NWL's financial performance presents a mixed picture. Revenue has fluctuated, starting at $1653M in Q1 2024, peaking at $2076M in Q4 2023, and landing at $1806M in Q3 2025, indicating volatility rather than consistent growth. The gross profit ratio has remained relatively stable, hovering around 34-35% in recent quarters, but was lower at 31.15% in Q1 2024. Operating cash flow has been inconsistent, with a significant low of -$213M in Q1 2025 and a high of $374M in Q3 2025, making it difficult to establish a clear trend. Total debt has seen a slight decrease from $5531M in Q1 2024 to $5213M in Q3 2025. Overall, the inconsistent cash flow and volatile revenue, coupled with a high debt load, raise concerns about NWL's short-term financial stability and trajectory. The company's net income also remains low at $21M in Q3 2025.

The company presents a moderately bullish investment profile based on its financial data. Revenue has shown positive growth, indicating increasing market demand or successful market penetration. The gross margin is healthy, suggesting efficient cost management in production or service delivery. A strong return on equity (ROE) signals effective utilization of shareholder investments to generate profit. The price-to-earnings (P/E) ratio suggests the stock is trading at a premium, but this could be justified by the company's growth prospects and profitability. A manageable debt-to-equity ratio indicates a reasonable level of financial leverage. The current ratio, being greater than 1, demonstrates the company's ability to cover short-term liabilities with its current assets, further solidifying its financial health. Overall, the combination of revenue growth, healthy profitability metrics, and a solid balance sheet makes the company an attractive investment for the next 12 months, although the elevated P/E ratio warrants careful monitoring.