Newell to Report Q2 Earnings: Does a Surprise Await Investors?

Newell Brands (NWL) is anticipated to report a Q2 2025 year-over-year decline, with revenues projected at $1.94 billion (down 4.4%) and EPS at $0.24 (down 33.3%), driven by soft demand in Outdoor & Recreation and FX headwinds amid a challenging macroeconomic environment. Despite these pressures, the company's strategic initiatives, including pricing, organizational streamlining, and a more resilient supply chain with reduced China exposure (15%), are expected to provide some offset. Zacks' model predicts an earnings beat for NWL, which also presents an attractive valuation at 8.63x forward P/E, a significant discount to industry averages, and has seen its shares outperform the industry by gaining 15% over the last three months.

Analysis

Newell Brands (NWL) is approaching its second-quarter 2025 earnings report with consensus estimates pointing to a significant year-over-year contraction. Projections indicate a 4.4% revenue decline to $1.94 billion and a 33.3% drop in EPS to $0.24, reflecting persistent macroeconomic pressures on consumer discretionary spending, foreign exchange headwinds, and pronounced weakness in its Outdoor & Recreation segment, where a sales decline of 11.2% is anticipated. Management's own guidance for a 3-5% sales decline and normalized EPS of 21-24 cents corroborates this challenging outlook. However, several positive factors counterbalance these headwinds. The company's strategic initiatives, including pricing actions and organizational streamlining, are expected to cushion performance. More significantly, NWL has proactively de-risked its supply chain by reducing its reliance on Chinese manufacturing to 15% of finished goods and increasing investment in U.S. production. Despite the expected top-line weakness, a proprietary model predicts an earnings beat, citing a positive Earnings ESP of +3.43%. This potential for a positive surprise is coupled with a compelling valuation, as NWL trades at a forward P/E of 8.63x—a steep discount to its historical high and the industry average of 19.97x. This valuation appeal is further underscored by the stock's recent outperformance, having gained 15% in the last three months against a 2.4% decline for its industry.

Key Decisions for Investors

• Given the model's prediction of an earnings beat and recent positive momentum, investors might consider the potential for a short-term rally around the earnings release, despite the weak year-over-year headline figures.
• For value-oriented investors, the stock's significant valuation discount relative to its industry, combined with successful supply chain restructuring, could represent an attractive long-term entry point, assuming a tolerance for near-term demand volatility.
• Closely monitor the upcoming earnings call for management's commentary on the demand outlook for the Outdoor & Recreation segment and evidence of margin stabilization, as these will be key indicators of the turnaround's effectiveness.