Critical Review: Procter & Gamble (NYSE:PG) and Newell Brands (NASDAQ:NWL)

Newell Brands (NASDAQ:NWL) and Procter & Gamble (NYSE:PG) are both consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Profitability

This table compares Newell Brands and Procter & Gamble’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Newell Brands	-0.33%	8.64%	2.08%
Procter & Gamble	19.74%	32.63%	13.53%

Valuation & Earnings

This table compares Newell Brands and Procter & Gamble”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Newell Brands	$7.58 billion	0.19	-$216.00 million	($0.06)	-57.00
Procter & Gamble	$84.93 billion	4.06	$15.97 billion	$6.85	21.56

Procter & Gamble has higher revenue and earnings than Newell Brands. Newell Brands is trading at a lower price-to-earnings ratio than Procter & Gamble, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Newell Brands and Procter & Gamble, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Newell Brands	1	5	4	0	2.30
Procter & Gamble	0	9	12	0	2.57

Newell Brands currently has a consensus target price of $5.86, suggesting a potential upside of 71.38%. Procter & Gamble has a consensus target price of $171.53, suggesting a potential upside of 16.12%. Given Newell Brands’ higher probable upside, equities research analysts clearly believe Newell Brands is more favorable than Procter & Gamble.

Institutional & Insider Ownership

92.5% of Newell Brands shares are held by institutional investors. Comparatively, 65.8% of Procter & Gamble shares are held by institutional investors. 0.7% of Newell Brands shares are held by company insiders. Comparatively, 0.2% of Procter & Gamble shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Newell Brands has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Procter & Gamble has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500.

Dividends

Newell Brands pays an annual dividend of $0.28 per share and has a dividend yield of 8.2%. Procter & Gamble pays an annual dividend of $4.22 per share and has a dividend yield of 2.9%. Newell Brands pays out -466.7% of its earnings in the form of a dividend. Procter & Gamble pays out 61.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Procter & Gamble has raised its dividend for 70 consecutive years. Newell Brands is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Procter & Gamble beats Newell Brands on 11 of the 17 factors compared between the two stocks.

About Newell Brands

Newell Brands Inc. engages in the design, manufacture, sourcing, and distribution of consumer and commercial products worldwide. The company operates in three segments: Home and Commercial Solutions, Learning and Development, and Outdoor and Recreation. The Commercial Solutions segment provides commercial cleaning and maintenance solution products under the Rubbermaid, Rubbermaid Commercial Products, Mapa, and Spontex brands; closet and garage organization products; hygiene systems and material handling solutions; household products, such as kitchen appliances under the Crockpot, Mr. Coffee, Oster, and Sunbeam brands; small appliances under the Breville brand name in Europe; food and home storage products under the FoodSaver, Rubbermaid, Ball, and Sistema brands; fresh preserving products; vacuum sealing products; and gourmet cookware, bakeware, and cutlery under the Calphalon brand; and home fragrance products under the WoodWick and Yankee Candle brands. The Learning and Development segment offers writing instruments, including markers and highlighters, pens, and pencils; art products; activity-based products; labeling solutions; and baby gear and infant care products under the Dymo, Elmer's, EXPO, Graco, NUK, Paper Mate, Parker, and Sharpie brands. The Outdoor and Recreation segment provides outdoor and outdoor-related products, inlcuding technical apparel and on-the-go beverageware under the Campingaz, Coleman, Contigo, and Marmot brands. It serves warehouse clubs, department and drug/grocery stores, mass merchants, home centers, commercial products distributors, specialty retailers, office superstores and supply stores, contract stationers, e-commerce retailers, and sporting goods, as well as direct to consumers online, select contract customers, and other professional customers. Newell Brands Inc. was founded in 1903 and is based in Atlanta, Georgia.

About Procter & Gamble

Procter & Gamble Co. engages in the provision of branded consumer packaged goods. It operates through the following segments: Beauty, Grooming, Health Care, Fabric and Home Care, and Baby, Feminine and Family Care. The Beauty segment offers hair, skin, and personal care. The Grooming segment consists of shave care like female and male blades and razors, pre and post shave products, and appliances. The Health Care segment includes oral care products like toothbrushes, toothpaste, and personal health care such as gastrointestinal, rapid diagnostics, respiratory, and vitamins, minerals, and supplements. The Fabric and Home care segment consists of fabric enhancers, laundry additives and detergents, and air, dish, and surface care. The Baby, Feminine and Family Care segment sells baby wipes, diapers, and pants, adult incontinence, feminine care, paper towels, tissues, and toilet paper. The company was founded by William Procter and James Gamble in 1837 and is headquartered in Cincinnati, OH.