What happened

Shares of Newell Brands (NWL 12.25%), maker of Rubbermaid food containers, Sharpie pens, and Coleman coolers, surged 11.1% through 3:20 p.m. ET Tuesday amid furious debating among Wall Street analysts over whether the consumer goods stock will make for a good investment -- or just so-so.

On the one hand, stock shop Canaccord initiated coverage of Newell with a "buy" rating and a $13 price target, predicting that "better days are ahead" after an "ugly" first half of 2023. On the other hand, though, investment bank Citigroup cut its own price target on the stock -- from $13 down to just $9 a share.

So what

Citing "new management at the helm" with a new strategy to grow sales, Canaccord is predicting that Newell will be able to improve both its profits and cash flow, and to use that extra cash to pay down some debt later this year, reports ratings watcher TheFly today.  

Citi isn't convinced, however. Macro headwinds remain in the form of still-formidable inflation and a Federal Reserve seemingly intent on strangling consumer spending with higher interest rates -- and Fed watchers have been talking recently of the potential for two or even three more rises in interest rates before 2023 is done. Citi worries that it will be difficult for Newell to grow sales (or profits) in such an environment, and until it sees evidence that Newell is surmounting the difficulties, the banker is keeping its rating at "neutral" for Newell.

Now what

Count me in Citi's camp in this debate. While I'd certainly love to see the economy improve, and Newell's business alongside it, the numbers simply don't look promising at this point.

With Newell's negative profits and negative free cash flow over the past year, most analysts still forecast negative earnings growth over the next five years. On top of that, Newell is carrying a net debt load of $6.1 billion -- bigger than the company's own market cap -- that will only get more cumbersome the higher interest rates go.

Even at a seemingly attractive valuation of only 0.4 times trailing sales, Newell still needs to earn some profits on those sales before I'd be willing to invest in it. And until Newell demonstrates that it's capable of earning profits in this kind of an economy, I'm simply not willing to gamble on the company's ability to overcome the odds against it.