Intrinsic value of Newell Brands Inc. - NWL

Previous Close

$15.00

  Intrinsic Value

$12.41

stock screener

  Rating & Target

hold

-17%

Previous close

$15.00

 
Intrinsic value

$12.41

 
Up/down potential

-17%

 
Rating

hold

We calculate the intrinsic value of NWL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 6.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  8,804
  9,006
  9,238
  9,497
  9,785
  10,101
  10,445
  10,818
  11,219
  11,649
  12,110
  12,602
  13,125
  13,681
  14,271
  14,897
  15,559
  16,259
  16,998
  17,779
  18,604
  19,473
  20,389
  21,354
  22,371
  23,441
  24,568
  25,753
  27,000
  28,312
Variable operating expenses, $m
  8,434
  8,609
  8,808
  9,032
  9,280
  9,552
  9,848
  10,168
  10,514
  10,884
  10,426
  10,849
  11,300
  11,778
  12,287
  12,825
  13,395
  13,998
  14,635
  15,307
  16,016
  16,765
  17,553
  18,384
  19,260
  20,181
  21,151
  22,172
  23,246
  24,375
Fixed operating expenses, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Total operating expenses, $m
  8,433
  8,608
  8,807
  9,031
  9,279
  9,551
  9,847
  10,167
  10,513
  10,883
  10,425
  10,848
  11,299
  11,777
  12,286
  12,824
  13,394
  13,997
  14,633
  15,305
  16,014
  16,763
  17,551
  18,382
  19,258
  20,179
  21,149
  22,170
  23,244
  24,373
Operating income, $m
  370
  398
  431
  467
  507
  551
  599
  651
  706
  766
  1,685
  1,754
  1,826
  1,904
  1,986
  2,073
  2,165
  2,262
  2,365
  2,474
  2,589
  2,710
  2,837
  2,971
  3,113
  3,261
  3,418
  3,583
  3,757
  3,939
EBITDA, $m
  1,475
  1,509
  1,548
  1,592
  1,640
  1,693
  1,750
  1,813
  1,880
  1,952
  2,029
  2,112
  2,199
  2,292
  2,391
  2,496
  2,607
  2,724
  2,848
  2,979
  3,117
  3,263
  3,416
  3,578
  3,748
  3,927
  4,116
  4,314
  4,523
  4,743
Interest expense (income), $m
  316
  379
  392
  408
  426
  447
  469
  494
  521
  550
  581
  615
  651
  689
  730
  773
  819
  868
  920
  974
  1,032
  1,093
  1,157
  1,225
  1,297
  1,372
  1,452
  1,535
  1,623
  1,716
  1,813
Earnings before tax, $m
  -9
  6
  22
  40
  60
  82
  105
  130
  157
  185
  1,071
  1,103
  1,138
  1,174
  1,213
  1,254
  1,297
  1,343
  1,391
  1,442
  1,495
  1,552
  1,612
  1,674
  1,740
  1,810
  1,883
  1,960
  2,041
  2,126
Tax expense, $m
  0
  2
  6
  11
  16
  22
  28
  35
  42
  50
  289
  298
  307
  317
  327
  338
  350
  363
  376
  389
  404
  419
  435
  452
  470
  489
  508
  529
  551
  574
Net income, $m
  -9
  4
  16
  30
  44
  60
  77
  95
  114
  135
  782
  805
  830
  857
  885
  915
  947
  980
  1,015
  1,053
  1,092
  1,133
  1,176
  1,222
  1,271
  1,321
  1,375
  1,431
  1,490
  1,552

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,077
  18,493
  18,968
  19,502
  20,093
  20,742
  21,448
  22,213
  23,037
  23,921
  24,867
  25,876
  26,950
  28,092
  29,304
  30,588
  31,948
  33,385
  34,904
  36,508
  38,200
  39,985
  41,866
  43,848
  45,935
  48,133
  50,447
  52,881
  55,442
  58,136
Adjusted assets (=assets-cash), $m
  18,077
  18,493
  18,968
  19,502
  20,093
  20,742
  21,448
  22,213
  23,037
  23,921
  24,867
  25,876
  26,950
  28,092
  29,304
  30,588
  31,948
  33,385
  34,904
  36,508
  38,200
  39,985
  41,866
  43,848
  45,935
  48,133
  50,447
  52,881
  55,442
  58,136
Revenue / Adjusted assets
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
Average production assets, $m
  7,501
  7,673
  7,870
  8,092
  8,337
  8,606
  8,899
  9,217
  9,558
  9,925
  10,318
  10,736
  11,182
  11,656
  12,159
  12,692
  13,256
  13,852
  14,483
  15,148
  15,850
  16,591
  17,371
  18,194
  19,060
  19,972
  20,932
  21,942
  23,004
  24,122
Working capital, $m
  4,323
  4,422
  4,536
  4,663
  4,805
  4,960
  5,129
  5,311
  5,508
  5,720
  5,946
  6,187
  6,444
  6,717
  7,007
  7,314
  7,639
  7,983
  8,346
  8,730
  9,134
  9,561
  10,011
  10,485
  10,984
  11,509
  12,063
  12,645
  13,257
  13,901
Total debt, $m
  7,268
  7,561
  7,895
  8,271
  8,687
  9,144
  9,641
  10,179
  10,759
  11,382
  12,048
  12,758
  13,515
  14,319
  15,172
  16,076
  17,033
  18,045
  19,114
  20,243
  21,435
  22,691
  24,015
  25,411
  26,880
  28,427
  30,056
  31,770
  33,573
  35,469
Total liabilities, $m
  12,726
  13,019
  13,354
  13,729
  14,146
  14,602
  15,100
  15,638
  16,218
  16,840
  17,506
  18,217
  18,973
  19,777
  20,630
  21,534
  22,491
  23,503
  24,573
  25,702
  26,893
  28,149
  29,474
  30,869
  32,339
  33,886
  35,514
  37,228
  39,031
  40,928
Total equity, $m
  5,351
  5,474
  5,615
  5,773
  5,948
  6,140
  6,349
  6,575
  6,819
  7,081
  7,361
  7,659
  7,977
  8,315
  8,674
  9,054
  9,457
  9,882
  10,332
  10,806
  11,307
  11,836
  12,392
  12,979
  13,597
  14,247
  14,932
  15,653
  16,411
  17,208
Total liabilities and equity, $m
  18,077
  18,493
  18,969
  19,502
  20,094
  20,742
  21,449
  22,213
  23,037
  23,921
  24,867
  25,876
  26,950
  28,092
  29,304
  30,588
  31,948
  33,385
  34,905
  36,508
  38,200
  39,985
  41,866
  43,848
  45,936
  48,133
  50,446
  52,881
  55,442
  58,136
Debt-to-equity ratio
  1.360
  1.380
  1.410
  1.430
  1.460
  1.490
  1.520
  1.550
  1.580
  1.610
  1.640
  1.670
  1.690
  1.720
  1.750
  1.780
  1.800
  1.830
  1.850
  1.870
  1.900
  1.920
  1.940
  1.960
  1.980
  2.000
  2.010
  2.030
  2.050
  2.060
Adjusted equity ratio
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296
  0.296

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -9
  4
  16
  30
  44
  60
  77
  95
  114
  135
  782
  805
  830
  857
  885
  915
  947
  980
  1,015
  1,053
  1,092
  1,133
  1,176
  1,222
  1,271
  1,321
  1,375
  1,431
  1,490
  1,552
Depreciation, amort., depletion, $m
  1,105
  1,111
  1,117
  1,125
  1,133
  1,142
  1,152
  1,162
  1,174
  1,186
  344
  358
  373
  389
  405
  423
  442
  462
  483
  505
  528
  553
  579
  606
  635
  666
  698
  731
  767
  804
Funds from operations, $m
  1,096
  1,115
  1,134
  1,154
  1,177
  1,202
  1,228
  1,257
  1,288
  1,321
  1,126
  1,163
  1,203
  1,246
  1,291
  1,338
  1,389
  1,442
  1,498
  1,557
  1,620
  1,686
  1,756
  1,829
  1,906
  1,987
  2,072
  2,162
  2,257
  2,356
Change in working capital, $m
  85
  99
  114
  128
  141
  155
  169
  183
  197
  211
  226
  241
  257
  273
  290
  307
  325
  344
  363
  383
  405
  427
  450
  474
  499
  526
  553
  582
  612
  644
Cash from operations, $m
  1,012
  1,016
  1,020
  1,027
  1,036
  1,046
  1,059
  1,074
  1,091
  1,110
  899
  922
  946
  973
  1,001
  1,031
  1,064
  1,098
  1,135
  1,174
  1,215
  1,259
  1,306
  1,355
  1,407
  1,461
  1,519
  1,580
  1,644
  1,712
Maintenance CAPEX, $m
  -245
  -250
  -256
  -262
  -270
  -278
  -287
  -297
  -307
  -319
  -331
  -344
  -358
  -373
  -389
  -405
  -423
  -442
  -462
  -483
  -505
  -528
  -553
  -579
  -606
  -635
  -666
  -698
  -731
  -767
New CAPEX, $m
  -146
  -173
  -197
  -221
  -245
  -269
  -293
  -317
  -342
  -367
  -392
  -419
  -446
  -474
  -503
  -533
  -564
  -596
  -630
  -665
  -702
  -740
  -781
  -822
  -866
  -912
  -960
  -1,010
  -1,063
  -1,118
Cash from investing activities, $m
  -391
  -423
  -453
  -483
  -515
  -547
  -580
  -614
  -649
  -686
  -723
  -763
  -804
  -847
  -892
  -938
  -987
  -1,038
  -1,092
  -1,148
  -1,207
  -1,268
  -1,334
  -1,401
  -1,472
  -1,547
  -1,626
  -1,708
  -1,794
  -1,885
Free cash flow, $m
  620
  593
  567
  543
  520
  499
  479
  460
  442
  424
  176
  159
  142
  126
  109
  93
  76
  60
  43
  26
  8
  -10
  -28
  -47
  -66
  -86
  -106
  -128
  -150
  -173
Issuance/(repayment) of debt, $m
  253
  293
  335
  376
  416
  457
  497
  538
  580
  622
  666
  710
  756
  804
  853
  904
  957
  1,012
  1,069
  1,129
  1,191
  1,256
  1,324
  1,395
  1,470
  1,547
  1,629
  1,714
  1,803
  1,896
Issuance/(repurchase) of shares, $m
  116
  119
  124
  128
  131
  132
  132
  132
  129
  126
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  369
  412
  459
  504
  547
  589
  629
  670
  709
  748
  666
  710
  756
  804
  853
  904
  957
  1,012
  1,069
  1,129
  1,191
  1,256
  1,324
  1,395
  1,470
  1,547
  1,629
  1,714
  1,803
  1,896
Total cash flow (excl. dividends), $m
  990
  1,005
  1,026
  1,047
  1,068
  1,088
  1,109
  1,130
  1,151
  1,173
  842
  870
  899
  930
  963
  997
  1,033
  1,072
  1,112
  1,155
  1,200
  1,247
  1,296
  1,349
  1,404
  1,461
  1,522
  1,586
  1,653
  1,724
Retained Cash Flow (-), $m
  -116
  -123
  -141
  -158
  -175
  -192
  -209
  -226
  -244
  -262
  -280
  -299
  -318
  -338
  -359
  -380
  -402
  -426
  -450
  -475
  -501
  -528
  -557
  -587
  -618
  -651
  -685
  -721
  -758
  -797
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  873
  882
  885
  889
  893
  896
  900
  904
  908
  911
  562
  571
  581
  592
  604
  617
  631
  646
  663
  680
  699
  719
  740
  762
  786
  811
  837
  866
  895
  927
Discount rate, %
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
  803
  739
  671
  603
  537
  473
  412
  355
  302
  253
  129
  106
  86
  69
  54
  42
  32
  24
  17
  12
  9
  6
  4
  2
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  98.2
  96.4
  94.7
  92.9
  91.2
  89.5
  88.0
  86.5
  85.1
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8
  83.8

Newell Brands Inc. is a marketer of consumer and commercial products. The Company's segments include Writing, Home Solutions, Commercial Products, Baby & Parenting, Branded Consumables, Consumer Solutions, Outdoor Solutions and Process Solutions. Its products are marketed under a portfolio of brands, including Paper Mate, Sharpie, Dymo, Expo, Parker, Elmer's, Coleman, Jostens, Marmot, Rawlings, Mr. Coffee, Rubbermaid Commercial Products, Graco, Baby Jogger, NUK, Calphalon, Rubbermaid, Contigo, First Alert, Waddington and Yankee Candle. Writing segment consists of the Writing and Creative Expression business. Home Solutions segment designs, manufactures or sources and distributes a range of consumer products under various brand names. Commercial Products segment designs, manufactures or sources and distributes cleaning and refuse products. Its Baby & Parenting segment designs and distributes infant and juvenile products.

FINANCIAL RATIOS  of  Newell Brands Inc. (NWL)

Valuation Ratios
P/E Ratio 13.7
Price to Sales 0.5
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 4
Price to Free Cash Flow 5.2
Growth Rates
Sales Growth Rate 124.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 109%
Cap. Spend. - 3 Yr. Gr. Rate 26.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.4
LT Debt to Equity 99.5%
Total Debt to Equity 104.8%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. 5.4%
Return On Total Capital 3.8%
Ret/ On T. Cap. - 3 Yr. Avg. 6.8%
Return On Equity 8%
Return On Equity - 3 Yr. Avg. 15.4%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 33.2%
Gross Margin - 3 Yr. Avg. 36.9%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 11.2%
Operating Margin 7.9%
Oper. Margin - 3 Yr. Avg. 8.4%
Pre-Tax Margin 6.1%
Pre-Tax Margin - 3 Yr. Avg. 6.6%
Net Profit Margin 4%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate 35.1%
Eff/ Tax Rate - 3 Yr. Avg. 25.9%
Payout Ratio 62.3%

NWL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NWL stock intrinsic value calculation we used $8631 million for the last fiscal year's total revenue generated by Newell Brands Inc.. The default revenue input number comes from 0001 income statement of Newell Brands Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NWL stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.8%, whose default value for NWL is calculated based on our internal credit rating of Newell Brands Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Newell Brands Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NWL stock the variable cost ratio is equal to 96%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $-1 million in the base year in the intrinsic value calculation for NWL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Newell Brands Inc..

Corporate tax rate of 27% is the nominal tax rate for Newell Brands Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NWL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NWL are equal to 85.2%.

Life of production assets of 31.7 years is the average useful life of capital assets used in Newell Brands Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NWL is equal to 49.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5243 million for Newell Brands Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 422.879 million for Newell Brands Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Newell Brands Inc. at the current share price and the inputted number of shares is $6.3 billion.

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