Carl Icahn Took a Large Position in Newell: Is the Stock Undervalued?

Carl Icahn in an interview with CNBC

On Thursday, March 1, 2018, investor Carl Icahn discussed his latest buying activity in an interview with CNBC. The legendary investor took a large position in Newell Brands (NWL) in the first quarter of 2018.

Carl Icahn Took a Large Position in Newell: Is the Stock Undervalued?

He said, “I believe Newell itself is undervalued and that’s why I bought it. There’s potential because these brands are another area in the retail business that I think will still survive and, in fact, get even more profitable.” Icahn disclosed that he bought Newell stock at around $25 per share. However, after disclosing his position in Newell Brands, its stock price immediately jumped 7.7% on March 1, 2018, and made a high of $27.67 on that day. It closed nearly 3.1% higher on the same day from its previous day’s closing.

Newell’s valuation

Newell Brands produces both consumer and commercial products. Presently, the stock is trading at a trailing price-to-earnings multiple of 4.72x. The durable household products industry is trading at a trailing price-to-earnings multiple of 16.4x. The consumer goods sector and the broader market S&P 500 Index is trading at trailing price-to-earnings multiples of 20.2x and 22.36x, respectively. Compared to its industry benchmark, Newell Brands is trading at lower multiples.

Newell Brands’ performance

Newell Brands has fallen 45.3% in the past one year. However, the broader market S&P 500 Index (SPY) rose 13.5% during the same period. However, Icahn believes this stock has huge potential to provide strong returns in the near future.

In the next part of this series, we’ll analyze Carl Icahn’s latest view on Herbalife (HLF).