Investment Thesis
Newell Brands is in financial distress with negative profitability, -$270M free cash flow, and unsustainable leverage (1.94x D/E) that cannot be serviced by the business. With interest coverage of only 0.5x and operating cash burn of -$233M, the company faces significant default risk absent material operational turnaround.
Strengths
- Gross margin of 33.1% demonstrates reasonable product economics and pricing power at the product level
- Generates $513M gross profit providing theoretical foundation for profitability if operating costs controlled
- $201M cash balance provides near-term liquidity buffer for operations
Risks
- Operating cash flow is -$233M, indicating the core business is consuming rather than generating cash
- Interest coverage ratio of 0.5x means operating income cannot cover debt service obligations, creating acute default risk
- Quick ratio of 0.51x signals potential liquidity crisis if business conditions deteriorate or creditor terms tighten
- Free cash flow of -$270M is structurally unsustainable and constrains ability to reduce debt or invest
- Revenue declining 5% YoY while company is unprofitable indicates weakening demand and structural headwinds
- Debt-to-equity of 1.94x with $4.5B long-term debt severely limits financial flexibility for strategic action
Key Metrics to Watch
- Operating cash flow stabilization - must turn positive to prove business viability
- Interest coverage ratio improvement - currently at critical level of 0.5x
- Revenue growth trajectory - the 5% decline must stabilize and reverse
- Operating margin expansion - the 2.2% margin must improve to absorb debt service
- Debt refinancing and covenant compliance - watch for distressed financing or covenant waivers
Financial Metrics
Revenue
1.5B
Net Income
-33.0M
EPS (Diluted)
$-0.08
Free Cash Flow
-270.0M
Total Assets
10.9B
Cash
201.0M
Profitability Ratios
Gross Margin
33.1%
Operating Margin
2.2%
Net Margin
-2.1%
ROE
-1.4%
ROA
-0.3%
FCF Margin
-17.4%
Balance Sheet & Liquidity
Current Ratio
1.04x
Quick Ratio
0.51x
Debt/Equity
1.94x
Debt/Assets
78.4%
Interest Coverage
0.49x
Long-term Debt
4.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T19:45:19.461285 |
Data as of: 2026-03-31 |
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