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Can Primo Brands' 30.5% Premium Water Growth Sustain Momentum?
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Key Takeaways
PRMB's premium brands grew 30.5%, with Saratoga and Mountain Valley gaining dollar and volume share.
Saratoga grew faster than Mountain Valley, which faced supply disruption during a new production line startup.
PRMB sees strong brand health, and expanded distribution supporting premium portfolio development.
Primo Brands Corporation (PRMB - Free Report) reported strong momentum across its premium portfolio, with Saratoga and Mountain Valley continuing to rank among the company’s strongest growth assets. In the second quarter, premium brands increased 30.5%. Within retail sales channels, premium sales growth exceeded the overall 30.5% premium-water increase, reflecting continued strength in retail. Both Saratoga and Mountain Valley increased their dollar and volume share of the category during the quarter, with Saratoga delivering stronger growth than Mountain Valley. Management noted that Mountain Valley experienced some product supply disruption during the startup of a new production line.
The company sees further growth opportunities for Saratoga and Mountain Valley, noting that the brands remain early in their growth journey. Management pointed to strong brand equity, expanding distribution and new capacity as factors supporting the portfolio’s development. It also sees opportunities to build scale and improve mix, which could contribute to operating leverage and margin expansion over time.
In addition, Primo Brands highlighted very strong brand health across both premium brands. Management said that the company will continue investing in brand building while working to increase consumer penetration, frequency and pack rate. These initiatives are expected to remain part of the company’s efforts to further develop the premium portfolio and sustain its growth momentum.
Overall, Primo Brands continues to identify premium as a growth vector, supported by strong brand health, expanded distribution, new capacity and continued brand-building efforts. The company also acknowledged the product supply disruption associated with the Mountain Valley line startup and emphasized the need to continue driving penetration, frequency and pack rate. Management did not provide a specific sustainable premium growth rate, but reiterated that the brands remain early in their growth journey and said it expects them to continue performing very well.
The Zacks Rundown for PRMB
PRMB shares have gained 2.3% in the past six months compared with the industry’s growth of 6%. The company currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, PRMB trades at a forward price-to-earnings ratio of 13.68X, lower than the industry’s average of 18.80X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PRMB’s current and next fiscal-year earnings implies year-over-year growth of 1.5% and 14.2%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
Luckin Coffee Inc. (LKNCY - Free Report) offers retail services of freshly brewed drinks and pre-made food and beverage items in the People's Republic of China. LKNCY currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LKNCY's current fiscal-year sales and earnings indicates growth of 33.3% and 40.8%, respectively. LKNCY delivered a trailing four-quarter negative earnings surprise of nearly 6.6%, on average.
The Chef’s Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. CHEF currently carries a Zacks Rank #1.
The Zacks Consensus Estimate for CHEF’s current fiscal-year sales and earnings indicates growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Chagee Holdings Limited (CHA - Free Report) offers classic espresso-based drinks, energy drinks and savory and sweet items under the all-day breakfast brand. CHA currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for CHA’s current fiscal-year sales and earnings implies growth of 14.7% and 2.8%, respectively, from the year-ago actuals. CHA delivered a trailing four-quarter negative earnings surprise of 2%, on average.
View the Zacks #1 Rank List
Image: Bigstock
Can Primo Brands' 30.5% Premium Water Growth Sustain Momentum?
Key Takeaways
Primo Brands Corporation (PRMB - Free Report) reported strong momentum across its premium portfolio, with Saratoga and Mountain Valley continuing to rank among the company’s strongest growth assets. In the second quarter, premium brands increased 30.5%. Within retail sales channels, premium sales growth exceeded the overall 30.5% premium-water increase, reflecting continued strength in retail. Both Saratoga and Mountain Valley increased their dollar and volume share of the category during the quarter, with Saratoga delivering stronger growth than Mountain Valley. Management noted that Mountain Valley experienced some product supply disruption during the startup of a new production line.
The company sees further growth opportunities for Saratoga and Mountain Valley, noting that the brands remain early in their growth journey. Management pointed to strong brand equity, expanding distribution and new capacity as factors supporting the portfolio’s development. It also sees opportunities to build scale and improve mix, which could contribute to operating leverage and margin expansion over time.
In addition, Primo Brands highlighted very strong brand health across both premium brands. Management said that the company will continue investing in brand building while working to increase consumer penetration, frequency and pack rate. These initiatives are expected to remain part of the company’s efforts to further develop the premium portfolio and sustain its growth momentum.
Overall, Primo Brands continues to identify premium as a growth vector, supported by strong brand health, expanded distribution, new capacity and continued brand-building efforts. The company also acknowledged the product supply disruption associated with the Mountain Valley line startup and emphasized the need to continue driving penetration, frequency and pack rate. Management did not provide a specific sustainable premium growth rate, but reiterated that the brands remain early in their growth journey and said it expects them to continue performing very well.
The Zacks Rundown for PRMB
PRMB shares have gained 2.3% in the past six months compared with the industry’s growth of 6%. The company currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, PRMB trades at a forward price-to-earnings ratio of 13.68X, lower than the industry’s average of 18.80X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PRMB’s current and next fiscal-year earnings implies year-over-year growth of 1.5% and 14.2%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
Luckin Coffee Inc. (LKNCY - Free Report) offers retail services of freshly brewed drinks and pre-made food and beverage items in the People's Republic of China. LKNCY currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LKNCY's current fiscal-year sales and earnings indicates growth of 33.3% and 40.8%, respectively. LKNCY delivered a trailing four-quarter negative earnings surprise of nearly 6.6%, on average.
The Chef’s Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. CHEF currently carries a Zacks Rank #1.
The Zacks Consensus Estimate for CHEF’s current fiscal-year sales and earnings indicates growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Chagee Holdings Limited (CHA - Free Report) offers classic espresso-based drinks, energy drinks and savory and sweet items under the all-day breakfast brand. CHA currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for CHA’s current fiscal-year sales and earnings implies growth of 14.7% and 2.8%, respectively, from the year-ago actuals. CHA delivered a trailing four-quarter negative earnings surprise of 2%, on average.