We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Primo Water (PRMW) Sells Major Part of International Business
Read MoreHide Full Article
Primo Water Corporation (PRMW - Free Report) announced that it has sold a significant portion of its international business for $575 million. This transaction excludes the company’s Aimia Foods, United Kingdom, Portugal and Israel businesses, but each of these will be sold in 2024.
Despite a 13% year-over-year increase in total revenues from international operations in third-quarter 2023, its divestiture will allow PRMW to focus on its domestic core operation, strengthen its balance sheet by lowering debts and increase shareholder value through dividend payment and share repurchases. Primo Water’s management has raised its $50 million share repurchase authorization to $75 million.
The proceeds from international asset sales will increase the financial flexibility of the company, provide for organic growth and aid in making accretive acquisitions. The fragmented water industry has too many small operators, which the company can acquire to expand its business.
Water Industry is Aging and Needs Investment
Per the U.S. Environmental Protection Agency, investments of $473 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructure, like water mains, storage tanks and purifying units, needs maintenance at proper intervals.
The repair and upgrade of other infrastructures like overhead storage tanks, treatment plants and water reservoirs are essential to providing uninterrupted 24x7 services to customers.
Miles of aging pipelines essentially require repairs and upgrades to maintain quality water and wastewater services. A delay in repairs could cause frequent disruptions in the 24x7 supply of potable water and sewer services. Leaks and accidents in the water mains result in the wastage of millions of gallons of potable water and increase utilities’ operational costs.
Other Water Utilities Investing in Infrastructure
Primo Water and other investor-owned water utilities are making systematic investments to upgrade and maintain water and wastewater infrastructure to provide reliable services to millions of customers across the United States.
American Water (AWK - Free Report) aims to invest $3.1 billion in 2024, with a significant portion utilized for infrastructure improvements in Regulated Businesses. Over the long term, AWK aims to invest in the range of $16-$17 billion in the 2024-2028 period and $34-$38 billion in the 2024-2033 period.
Essential Utilities (WTRG - Free Report) plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve the water and natural gas systems and better serve customers with the help of improved information technology.
California Water Service Group (CWT - Free Report) plans to invest more than $725 million in capital expenditures through 2024.
The Zacks Consensus Estimate for AWK, WTRG and CWT’s 2024 earnings indicates year-over-year growth of 6.8%, 7.4% and 3.2%, respectively.
Price Performance
In the last six months, the PRMW’s stock returned 20.4% against the industry’s 36.8% decline.
Image: Bigstock
Primo Water (PRMW) Sells Major Part of International Business
Primo Water Corporation (PRMW - Free Report) announced that it has sold a significant portion of its international business for $575 million. This transaction excludes the company’s Aimia Foods, United Kingdom, Portugal and Israel businesses, but each of these will be sold in 2024.
Despite a 13% year-over-year increase in total revenues from international operations in third-quarter 2023, its divestiture will allow PRMW to focus on its domestic core operation, strengthen its balance sheet by lowering debts and increase shareholder value through dividend payment and share repurchases. Primo Water’s management has raised its $50 million share repurchase authorization to $75 million.
The proceeds from international asset sales will increase the financial flexibility of the company, provide for organic growth and aid in making accretive acquisitions. The fragmented water industry has too many small operators, which the company can acquire to expand its business.
Water Industry is Aging and Needs Investment
Per the U.S. Environmental Protection Agency, investments of $473 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructure, like water mains, storage tanks and purifying units, needs maintenance at proper intervals.
The repair and upgrade of other infrastructures like overhead storage tanks, treatment plants and water reservoirs are essential to providing uninterrupted 24x7 services to customers.
Miles of aging pipelines essentially require repairs and upgrades to maintain quality water and wastewater services. A delay in repairs could cause frequent disruptions in the 24x7 supply of potable water and sewer services. Leaks and accidents in the water mains result in the wastage of millions of gallons of potable water and increase utilities’ operational costs.
Other Water Utilities Investing in Infrastructure
Primo Water and other investor-owned water utilities are making systematic investments to upgrade and maintain water and wastewater infrastructure to provide reliable services to millions of customers across the United States.
American Water (AWK - Free Report) aims to invest $3.1 billion in 2024, with a significant portion utilized for infrastructure improvements in Regulated Businesses. Over the long term, AWK aims to invest in the range of $16-$17 billion in the 2024-2028 period and $34-$38 billion in the 2024-2033 period.
Essential Utilities (WTRG - Free Report) plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve the water and natural gas systems and better serve customers with the help of improved information technology.
California Water Service Group (CWT - Free Report) plans to invest more than $725 million in capital expenditures through 2024.
The Zacks Consensus Estimate for AWK, WTRG and CWT’s 2024 earnings indicates year-over-year growth of 6.8%, 7.4% and 3.2%, respectively.
Price Performance
In the last six months, the PRMW’s stock returned 20.4% against the industry’s 36.8% decline.
Image Source: Zacks Investment Research
Zacks Rank
Primo Water Corporation currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.