Critical Analysis: Primo Brands (PRMB) vs. Its Peers

Primo Brands (NYSE:PRMB) is one of 18 publicly-traded companies in the “Bottled & canned soft drinks” industry, but how does it contrast to its peers? We will compare Primo Brands to similar businesses based on the strength of its valuation, dividends, risk, earnings, analyst recommendations, institutional ownership and profitability.

Volatility and Risk

Primo Brands has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Primo Brands’ peers have a beta of 0.90, meaning that their average stock price is 10% less volatile than the S&P 500.

Profitability

This table compares Primo Brands and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Primo Brands	13.63%	8.80%	3.62%
Primo Brands Competitors	9.09%	19.71%	7.31%

Dividends

Primo Brands pays an annual dividend of $0.36 per share and has a dividend yield of 1.2%. Primo Brands pays out 22.4% of its earnings in the form of a dividend. As a group, “Bottled & canned soft drinks” companies pay a dividend yield of 1.0% and pay out 19.1% of their earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Primo Brands and its peers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Primo Brands	0	0	1	0	3.00
Primo Brands Competitors	191	654	1220	114	2.58

Primo Brands presently has a consensus target price of $33.00, indicating a potential upside of 5.94%. As a group, “Bottled & canned soft drinks” companies have a potential upside of 26.02%. Given Primo Brands’ peers higher possible upside, analysts clearly believe Primo Brands has less favorable growth aspects than its peers.

Earnings & Valuation

This table compares Primo Brands and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Primo Brands	$4.84 billion	$238.10 million	19.35
Primo Brands Competitors	$72.35 billion	$732.69 million	16.39

Primo Brands’ peers have higher revenue and earnings than Primo Brands. Primo Brands is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Insider and Institutional Ownership

87.7% of Primo Brands shares are owned by institutional investors. Comparatively, 48.3% of shares of all “Bottled & canned soft drinks” companies are owned by institutional investors. 2.5% of Primo Brands shares are owned by insiders. Comparatively, 14.5% of shares of all “Bottled & canned soft drinks” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Primo Brands peers beat Primo Brands on 8 of the 15 factors compared.

Primo Brands Company Profile

Primo Water Corporation is a leading pure-play water solutions provider in North America and Europe. Primo operates largely under a recurring razor/razorblade revenue model. The razor in Primo’s revenue model is its industry leading line-up of sleek and innovative water dispensers, which are sold through major retailers and online at various price points or leased to customers. The dispensers help increase household penetration, which drives recurring purchases of Primo’s razorblade offering. Primo’s razorblade offering is comprised of Water Direct, Water Exchange, and Water Refill. Primo’s water solutions expand consumer access to purified, spring and mineral water to promote a healthier, more sustainable lifestyle while simultaneously reducing plastic waste and pollution. Primo is committed to its water stewardship standards and is proud to partner with the International Bottled Water Association in North America as well as with Watercoolers Europe.