Primo Brands Corp (NYSE: PRMB)

Sector: Consumer Defensive Industry: Beverages - Non-Alcoholic CIK: 0002042694
Market Cap 3.24 Bn
P/B 2.44
P/E -182.80
P/S 1.60
ROIC (Qtr) 2.79
Div Yield % 1.86
Rev 1y % (Qtr) 35.32
Total Debt (Qtr) 5.70 Bn
Debt/Equity (Qtr) 1.80
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About

Investment thesis

Bull case

  • Healthy cash reserves of 422.70M provide 2.58x coverage of short-term debt 164.10M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 690.70M provides strong 24.32x coverage of stock compensation 28.40M, indicating sustainable incentive practices.
  • Robust free cash flow of 416.40M exceeds capital expenditure of 274.30M by 1.52x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 4.29B provides 130.79x coverage of working capital 32.80M, indicating strong operational backing.
  • Operating cash flow of 690.70M provides strong 2.95x coverage of inventory 233.90M, indicating efficient inventory management.

Bear case

  • Operating cash flow of 690.70M provides thin coverage of dividend payments of (105.10M) with a -6.57 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 422.70M provide limited coverage of acquisition spending of 663.40M, which is 0.64x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 550M relative to inventory of 233.90M (2.35 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 595.10M show weak coverage of depreciation charges of 621.40M, with a 0.96 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 621.40M relative to operating cash flow of 690.70M, which is 0.90x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Beverages - Non-Alcoholic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KO Coca Cola Co 359.59 Bn 41.22 7.57 47.42 Bn
2 PEP Pepsico Inc 221.63 Bn 26.90 2.36 49.18 Bn
3 MNST Monster Beverage Corp 80.88 Bn 46.84 10.14 0.11 Bn
4 CCEP COCA-COLA EUROPACIFIC PARTNERS plc 48.53 Bn 20.84 1.97 12.58 Bn
5 COKE Coca-Cola Consolidated, Inc. 15.28 Bn 534.08 9.79 1.92 Bn
6 CELH Celsius Holdings, Inc. 10.33 Bn 399.18 4.86 0.86 Bn
7 KDP Keurig Dr Pepper Inc. 5.72 Bn 8.07 0.94 15.85 Bn
8 FIZZ National Beverage Corp 3.42 Bn 18.34 2.85 0.07 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.43 3.00
EV to Cash from Ops. EV/CFO 22.63 25.34
EV to Debt EV to Debt 0.84 82.79
EV to EBIT EV/EBIT 67.58 35.67
EV to EBITDA EV/EBITDA 14.89 24.62
EV to Free Cash Flow [EV/FCF] EV/FCF 47.64 40.15
EV to Market Cap EV to Market Cap 1.47 2.70
EV to Revenue EV/Rev 2.35 3.95
Price to Book Value [P/B] P/B 2.44 15.38
Price to Earnings [P/E] P/E -182.80 112.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.22 -230.19
Dividend Payout Ratio % Div Payout % (Qtr) -327.00 -1.98
Dividend per Basic Share Div per Share (Qtr) 0.39 0.88
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 34.88 30.31
Interest Coverage Int. cover (Qtr) 1.06 3.00
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -33.09 -59.79
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -36.66 125.83
Dividend Growth (1y) % Div 1y % (Qtr) -66.67 -6.02
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -174.68 -5.50
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 12.63 4.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -16.30 70.95
EBT Growth (1y) % EBT 1y % (Qtr) -85.21 3.85
EPS Growth (1y) % EPS 1y % (Qtr) -167.27 5.85
FCF Growth (1y) % FCF 1y % (Qtr) 84.49 19.77
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 34.38 12.14
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.80 1.15
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.16
Cash Ratio Cash Ratio (Qtr) 0.29 0.76
Current Ratio Curr Ratio (Qtr) 1.02 1.78
Debt to Equity Ratio Debt/Equity (Qtr) 1.80 1.22
Interest Cover Ratio Int Coverage (Qtr) 1.06 3.00
Times Interest Earned Times Interest Earned (Qtr) 1.06 3.00
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.80 9.71
EBIT Margin % EBIT Margin % (Qtr) 6.75 6.85
EBT Margin % EBT Margin % (Qtr) 0.38 5.02
Gross Margin % Gross Margin % (Qtr) 25.80 40.60
Net Profit Margin % Net Margin % (Qtr) -0.30 2.49