Financial Review: Primo Brands (NYSE:PRMB) and Reed’s (NYSE:REED)

Reed’s (NYSE:REED) and Primo Brands (NYSE:PRMB) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Institutional and Insider Ownership

51.5% of Reed’s shares are owned by institutional investors. Comparatively, 87.7% of Primo Brands shares are owned by institutional investors. 46.7% of Reed’s shares are owned by company insiders. Comparatively, 2.5% of Primo Brands shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Reed’s and Primo Brands”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reed’s	$50.78 million	0.10	-$15.52 million	($4.06)	-0.15
Primo Brands	$4.84 billion	2.42	$238.10 million	$1.61	19.15

Primo Brands has higher revenue and earnings than Reed’s. Reed’s is trading at a lower price-to-earnings ratio than Primo Brands, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Reed’s and Primo Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Reed’s	-39.16%	N/A	-72.46%
Primo Brands	13.63%	8.80%	3.62%

Volatility and Risk

Reed’s has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Primo Brands has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Reed’s and Primo Brands, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reed’s	0	0	0	0	0.00
Primo Brands	0	0	3	0	3.00

Primo Brands has a consensus price target of $37.00, indicating a potential upside of 20.01%. Given Primo Brands’ stronger consensus rating and higher probable upside, analysts plainly believe Primo Brands is more favorable than Reed’s.

Summary

Primo Brands beats Reed’s on 13 of the 14 factors compared between the two stocks.

About Reed’s

Reed's, Inc. engages in the manufacture and distribution of natural beverages in the United States. The company offers Reed's craft ginger beer; Reed's real ginger ales; Reed's Classic Mules; Reed's Hard Ginger Ale; Reed's ready to drink products; and Virgil's handcrafted sodas. It sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants, as well as directly to consumers through www.drinkreeds.com. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.

About Primo Brands

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.