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Opinions Bruce Murray
Newell Brands IncNWLTOP PICKSep 20, 2017
Bruce MurrayStock price when the opinion was issued
As of Jun 15, 2026. Market Open.
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Soared 17% last Thursday after a report, going positive for the year after a long slump. Why did they soar while Newell Brands has lagged? Both make discretionary goods at a time when consumers are spending more on services or experiences. Yeti soared during Covid, but fell after. Since last October's market bottom, Yeti has rallied 61%. Revenue growth slowed from 29% in 2021 to 13% in 2022, sales never fell. Yeti's edge over Newell is its coolers. Their gross margins have swung from the high-50s in 2021 to low-50s in 2022, better than Newell's. For 2023, Wall St. projects Yeti's earnings to fall 3% vs. Newell plunging 48%. YETI has a strong balance sheet vs. Newell's $5 billion debt. Yeti never paid a dividend, but Newell's pays a generous one that they had to slash by 70% to 2.6%. That triggered a sell-off by income investors. That said, both companies are buys. Last week, Yeti raised its full-year forecast, especially over the holidays. Newell is a turnarounds tory under new management. The CEO had to slash the dividend. Their last quarter beat top and bottom line, but the CEO lowered guidance for the rest of the year. He thinks that was the last bad quarter, and the last bad quarter is the time to invest in a stock. Also, Newell is laying off 2% of its workforce and automating its warehouses and reducing their brands (they have way too many). Yeti is returning to growth mode at 16.4x PE 2024 vs. Newell's under 10x PE 2024. He prefers Yeti.
They did a merger with Rubber Maid a couple of years ago. Part of the issue was the amount of debt levels. There has been more competition from Amazon. The acquisition did not go as planned. He is not interested right now.
Bruce Murray
This was a top pick in August. Then we had the hurricanes that hammered Houston. This company owns Rubbermaid and they buy a lot of rubber. They just put out a press release saying their earnings were going to be hurt because of the increased cost of rubber, and in fact might not get it for a period of time. Because of this, the stock has been hit and is now in the low $40s. He does not believe this is a long-term event, and he would buy the heck of it at this price. It is $3 of earnings and an extremely well-managed company. They own a plethora of brands. Earnings are $3 currently, and he thinks that goes to $4 in a couple of years. Has a $60 target price. Dividend yield of 2.2%. (Analysts’ price target is $58.)