Primo Water Corporation (PRMW) Stock Fundamental Analysis

USA • New York Stock Exchange • NYSE:PRMW • CA74167P1080

24.21 USD
-0.23 (-0.94%)
At close: Nov 8, 2024
24.26 USD
+0.05 (+0.21%)
After Hours: 11/8/2024, 8:15:10 PM
Fundamental Rating

5

Taking everything into account, PRMW scores 5 out of 10 in our fundamental rating. PRMW was compared to 32 industry peers in the Beverages industry. PRMW has an average financial health and profitability rating. PRMW is valued correctly, but it does not seem to be growing.


Dividend Valuation Growth Profitability Health

6

1. Profitability

1.1 Basic Checks

  • PRMW had positive earnings in the past year.
  • In the past year PRMW had a positive cash flow from operations.
  • The reported net income has been mixed in the past 5 years: PRMW reported negative net income in multiple years.
  • PRMW had a positive operating cash flow in each of the past 5 years.
PRMW Yearly Net Income VS EBIT VS OCF VS FCFPRMW Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 0 100M -100M 200M 300M

1.2 Ratios

  • With a decent Return On Assets value of 7.22%, PRMW is doing good in the industry, outperforming 60.61% of the companies in the same industry.
  • Looking at the Return On Equity, with a value of 17.34%, PRMW is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
  • PRMW has a worse Return On Invested Capital (4.13%) than 72.73% of its industry peers.
  • The Average Return On Invested Capital over the past 3 years for PRMW is significantly below the industry average of 11.62%.
  • The last Return On Invested Capital (4.13%) for PRMW is above the 3 year average (3.20%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 7.22%
ROE 17.34%
ROIC 4.13%
ROA(3y)2.49%
ROA(5y)0.78%
ROE(3y)6.19%
ROE(5y)1.81%
ROIC(3y)3.2%
ROIC(5y)3.02%
PRMW Yearly ROA, ROE, ROICPRMW Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2016 2017 2018 2019 2020 2021 2022 2023 0 10 20 30

1.3 Margins

  • PRMW's Profit Margin of 17.64% is amongst the best of the industry. PRMW outperforms 81.82% of its industry peers.
  • PRMW's Profit Margin has declined in the last couple of years.
  • PRMW has a Operating Margin of 12.23%. This is in the lower half of the industry: PRMW underperforms 63.64% of its industry peers.
  • PRMW's Operating Margin has improved in the last couple of years.
  • PRMW's Gross Margin of 68.16% is amongst the best of the industry. PRMW outperforms 100.00% of its industry peers.
  • PRMW's Gross Margin has improved in the last couple of years.
Industry RankSector Rank
OM 12.23%
PM (TTM) 17.64%
GM 68.16%
OM growth 3Y10.6%
OM growth 5Y18.86%
PM growth 3YN/A
PM growth 5Y-8.87%
GM growth 3Y4.02%
GM growth 5Y2.34%
PRMW Yearly Profit, Operating, Gross MarginsPRMW Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2016 2017 2018 2019 2020 2021 2022 2023 0 20 40 60

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6

2. Health

2.1 Basic Checks

  • PRMW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
  • PRMW has about the same amout of shares outstanding than it did 1 year ago.
  • Compared to 1 year ago, PRMW has an improved debt to assets ratio.
PRMW Yearly Shares OutstandingPRMW Yearly Shares OutstandingYearly Shares Outstanding 2016 2017 2018 2019 2020 2021 2022 2023 50M 100M 150M
PRMW Yearly Total Debt VS Total AssetsPRMW Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2016 2017 2018 2019 2020 2021 2022 2023 1B 2B 3B 4B

2.2 Solvency

  • An Altman-Z score of 1.96 indicates that PRMW is not a great score, but indicates only limited risk for bankruptcy at the moment.
  • The Altman-Z score of PRMW (1.96) is comparable to the rest of the industry.
  • PRMW has a debt to FCF ratio of 5.49. This is a neutral value as PRMW would need 5.49 years to pay back of all of its debts.
  • PRMW has a better Debt to FCF ratio (5.49) than 69.70% of its industry peers.
  • A Debt/Equity ratio of 0.86 indicates that PRMW is somewhat dependend on debt financing.
  • The Debt to Equity ratio of PRMW (0.86) is comparable to the rest of the industry.
Industry RankSector Rank
Debt/Equity 0.86
Debt/FCF 5.49
Altman-Z 1.96
ROIC/WACC0.54
WACC7.61%
PRMW Yearly LT Debt VS Equity VS FCFPRMW Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 500M 1B 1.5B 2B

2.3 Liquidity

  • PRMW has a Current Ratio of 2.34. This indicates that PRMW is financially healthy and has no problem in meeting its short term obligations.
  • The Current ratio of PRMW (2.34) is better than 66.67% of its industry peers.
  • PRMW has a Quick Ratio of 2.23. This indicates that PRMW is financially healthy and has no problem in meeting its short term obligations.
  • PRMW has a better Quick ratio (2.23) than 90.91% of its industry peers.
Industry RankSector Rank
Current Ratio 2.34
Quick Ratio 2.23
PRMW Yearly Current Assets VS Current LiabilitesPRMW Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2016 2017 2018 2019 2020 2021 2022 2023 200M 400M 600M 800M

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3

3. Growth

3.1 Past

  • PRMW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.20%, which is quite good.
  • Measured over the past years, PRMW shows a very strong growth in Earnings Per Share. The EPS has been growing by 22.74% on average per year.
  • Looking at the last year, PRMW shows a very negative growth in Revenue. The Revenue has decreased by -36.45% in the last year.
  • PRMW shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -0.22% yearly.
EPS 1Y (TTM)12.2%
EPS 3Y15.98%
EPS 5Y22.74%
EPS Q2Q%6.06%
Revenue 1Y (TTM)-36.45%
Revenue growth 3Y-3.2%
Revenue growth 5Y-0.22%
Sales Q2Q%-17.78%

3.2 Future

  • PRMW is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.95% yearly.
  • PRMW is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.75% yearly.
EPS Next Y27.83%
EPS Next 2Y21.02%
EPS Next 3Y22.04%
EPS Next 5Y10.95%
Revenue Next Year-18.79%
Revenue Next 2Y-7.32%
Revenue Next 3Y-2.88%
Revenue Next 5Y-0.75%

3.3 Evolution

  • The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
  • When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
PRMW Yearly Revenue VS EstimatesPRMW Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 1B 2B 3B
PRMW Yearly EPS VS EstimatesPRMW Yearly EPS VS EstimatesYearly EPS VS Estimates 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 0 0.5 1

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5

4. Valuation

4.1 Price/Earnings Ratio

  • Based on the Price/Earnings ratio of 26.32, the valuation of PRMW can be described as expensive.
  • The rest of the industry has a similar Price/Earnings ratio as PRMW.
  • The average S&P500 Price/Earnings ratio is at 28.32. PRMW is around the same levels.
  • Based on the Price/Forward Earnings ratio of 21.19, the valuation of PRMW can be described as rather expensive.
  • PRMW's Price/Forward Earnings ratio is in line with the industry average.
  • The average S&P500 Price/Forward Earnings ratio is at 25.57. PRMW is around the same levels.
Industry RankSector Rank
PE 26.32
Fwd PE 21.19
PRMW Price Earnings VS Forward Price EarningsPRMW Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 5 10 15 20 25

4.2 Price Multiples

  • PRMW's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PRMW is cheaper than 60.61% of the companies in the same industry.
  • Based on the Price/Free Cash Flow ratio, PRMW is valued cheaply inside the industry as 84.85% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 16.59
EV/EBITDA 13.63
PRMW Per share dataPRMW EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 2 4 6 8

4.3 Compensation for Growth

  • PRMW's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
  • PRMW has a very decent profitability rating, which may justify a higher PE ratio.
  • PRMW's earnings are expected to grow with 22.04% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.95
PEG (5Y)1.16
EPS Next 2Y21.02%
EPS Next 3Y22.04%

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6

5. Dividend

5.1 Amount

  • With a Yearly Dividend Yield of 1.34%, PRMW has a reasonable but not impressive dividend return.
  • PRMW's Dividend Yield is comparable with the industry average which is at 1.68.
  • PRMW's Dividend Yield is slightly below the S&P500 average, which is at 1.83.
Industry RankSector Rank
Dividend Yield 1.34%

5.2 History

  • The dividend of PRMW has a limited annual growth rate of 1.16%.
  • PRMW has paid a dividend for at least 10 years, which is a reliable track record.
  • PRMW has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)1.16%
Div Incr Years2
Div Non Decr Years11
PRMW Yearly Dividends per sharePRMW Yearly Dividends per shareYearly Dividends per share 2016 2017 2018 2019 2020 2021 2022 2023 2024 0.2 0.4 0.6 0.8 1

5.3 Sustainability

  • 22.12% of the earnings are spent on dividend by PRMW. This is a low number and sustainable payout ratio.
  • The dividend of PRMW is growing, but earnings are growing more, so the dividend growth is sustainable.
DP22.12%
EPS Next 2Y21.02%
EPS Next 3Y22.04%
PRMW Yearly Income VS Free CF VS DividendPRMW Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2016 2017 2018 2019 2020 2021 2022 2023 0 100M -100M 200M 300M
PRMW Dividend Payout.PRMW Dividend Payout, showing the Payout Ratio.PRMW Dividend Payout.PayoutRetained Earnings

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Primo Water Corporation / PRMW FAQ

What is the fundamental rating for PRMW stock?

ChartMill assigns a fundamental rating of 5 / 10 to PRMW.


What is the valuation status for PRMW stock?

ChartMill assigns a valuation rating of 5 / 10 to Primo Water Corporation (PRMW). This can be considered as Fairly Valued.


What is the profitability of PRMW stock?

Primo Water Corporation (PRMW) has a profitability rating of 6 / 10.


What is the valuation of Primo Water Corporation based on its PE and PB ratios?

The Price/Earnings (PE) ratio for Primo Water Corporation (PRMW) is 26.32 and the Price/Book (PB) ratio is 2.62.


What is the expected EPS growth for Primo Water Corporation (PRMW) stock?

The Earnings per Share (EPS) of Primo Water Corporation (PRMW) is expected to grow by 27.83% in the next year.