Critical Contrast: Luckin Coffee (OTCMKTS:LKNCY) versus Westrock Coffee (NASDAQ:WEST)

Westrock Coffee (NASDAQ:WEST) and Luckin Coffee (OTCMKTS:LKNCY) are both consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Insider & Institutional Ownership

45.1% of Westrock Coffee shares are owned by institutional investors. Comparatively, 0.5% of Luckin Coffee shares are owned by institutional investors. 27.7% of Westrock Coffee shares are owned by insiders. Comparatively, 2.7% of Luckin Coffee shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for Westrock Coffee and Luckin Coffee, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westrock Coffee	1	0	3	0	2.50
Luckin Coffee	0	1	1	0	2.50

Westrock Coffee presently has a consensus price target of $9.00, suggesting a potential upside of 111.27%. Luckin Coffee has a consensus price target of $52.00, suggesting a potential upside of 50.72%. Given Westrock Coffee’s higher possible upside, analysts clearly believe Westrock Coffee is more favorable than Luckin Coffee.

Valuation & Earnings

This table compares Westrock Coffee and Luckin Coffee”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westrock Coffee	$850.73 million	0.48	-$80.30 million	($0.98)	-4.35
Luckin Coffee	$4.72 billion	2.07	$401.71 million	$1.76	19.60

Luckin Coffee has higher revenue and earnings than Westrock Coffee. Westrock Coffee is trading at a lower price-to-earnings ratio than Luckin Coffee, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Westrock Coffee and Luckin Coffee’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westrock Coffee	-8.58%	-98.07%	-4.26%
Luckin Coffee	8.45%	33.69%	17.02%

Volatility and Risk

Westrock Coffee has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, Luckin Coffee has a beta of -0.28, indicating that its stock price is 128% less volatile than the S&P 500.

Summary

Luckin Coffee beats Westrock Coffee on 8 of the 13 factors compared between the two stocks.

About Westrock Coffee

Westrock Coffee Company, LLC operates as an integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States and internationally. It operates through two segments, Beverage Solutions, and Sustainable Sourcing & Traceability (SS&T). The Beverage Solutions segment provides various packaging, including branded and private label coffee in bags, fractional packs, and single serve cups, as well as extract solutions for applications in cold brew and ready-to-drink offerings. The SS&T segment engages in delivery and settlement of forward sales contracts for green coffee. The company offers coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to the retail, food service and restaurant, convenience store and travel center, non-commercial account, CPG, and hospitality industries. Westrock Coffee Company, LLC was founded in 2009 and is headquartered in Little Rock, Arkansas.

About Luckin Coffee

Luckin Coffee Inc. offers retail services of freshly brewed drinks, and pre-made food and beverage items in the People's Republic of China. It offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers Luckin Pop premium instant coffee and inspirational cups through mobile apps and e-commerce platforms. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company offers technical and consultation services; and manufactures materials for products. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.