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Reasons to Add Primo Water (PRMW) to Your Portfolio Now
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Primo Water Corporation’s (PRMW - Free Report) rising earnings estimates, stable return on equity (ROE) and growth prospects make it a great investment bet in the utility sector. The organic customer base growth and rising demand for water is also boosting prospects of the company.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a robust investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 and 2025 EPS has increased 7.9% and 2.8% to 95 cents and $1.10, respectively, in the past 60 days.
Primo Water’s long term (three-to-five years) earnings growth rate is pegged at 15.5%.
Dividend & Share Repurchase
PRMW has been increasing shareholders’ value through dividend payments and share buybacks. In February 2024, Primo Water announced a quarterly dividend of 9 cents per share, an increase of 12.5% from the previous level of 8 cents, resulting in an annual dividend of 36 cents. Its current dividend yield is 1.62%, marginally better than the Zacks S&P 500 composite’s yield of 1.61%.
The company is also repurchasing its shares to increase shareholders’ value. In 2021-2023 period it repurchased shares worth $89 million. It has plans to buy back shares worth $73 million in 2024.
Return on Equity
ROE indicates how efficiently a company has been utilizing funds to generate higher returns. Currently, PRMW’s ROE is 10.3%, higher than the sector’s average of 9.31%. This indicates that the company has been utilizing funds more constructively than its peers in the utility sector.
Investments
PRMW is making consistent investment to strengthen its infrastructure to efficiently serve its customers. The company invested $437.7 million in 2021-2023. It aims to invest $153.4 million in 2024.
Solvency & Liquidity
Primo Water’s times interest earned ratio (TIE) at the end of the first quarter of 2024 was 2.8. TIE ratio of more than one indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
The current ratio at the end of the first quarter was 2.014, much higher than the industry’s average of 1.15. The ratio, being greater than one, indicates its ability to meet its future short-term liabilities without difficulties.
Price Performance
In the past year, the stock has returned 72.7% against the industry’s 5.3% decline
CWT delivered an average earnings surprise of 85.16% in the last four quarters. The Zacks Consensus Estimate for 2024 EPS has moved up 40% in the past 60 days to $3.15.
IDA delivered an average earnings surprise of 85.16% in the last four quarters. The Zacks Consensus Estimate for 2024 EPS has risen 0.6% in the past 30 days to $5.35.
MDU’s long-term earnings growth is pinned at 6%. The Zacks Consensus Estimate for 2024 EPS has inched up 1.3% in the past 60 days to $1.55.
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Reasons to Add Primo Water (PRMW) to Your Portfolio Now
Primo Water Corporation’s (PRMW - Free Report) rising earnings estimates, stable return on equity (ROE) and growth prospects make it a great investment bet in the utility sector. The organic customer base growth and rising demand for water is also boosting prospects of the company.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a robust investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2024 and 2025 EPS has increased 7.9% and 2.8% to 95 cents and $1.10, respectively, in the past 60 days.
Primo Water’s long term (three-to-five years) earnings growth rate is pegged at 15.5%.
Dividend & Share Repurchase
PRMW has been increasing shareholders’ value through dividend payments and share buybacks. In February 2024, Primo Water announced a quarterly dividend of 9 cents per share, an increase of 12.5% from the previous level of 8 cents, resulting in an annual dividend of 36 cents. Its current dividend yield is 1.62%, marginally better than the Zacks S&P 500 composite’s yield of 1.61%.
The company is also repurchasing its shares to increase shareholders’ value. In 2021-2023 period it repurchased shares worth $89 million. It has plans to buy back shares worth $73 million in 2024.
Return on Equity
ROE indicates how efficiently a company has been utilizing funds to generate higher returns. Currently, PRMW’s ROE is 10.3%, higher than the sector’s average of 9.31%. This indicates that the company has been utilizing funds more constructively than its peers in the utility sector.
Investments
PRMW is making consistent investment to strengthen its infrastructure to efficiently serve its customers. The company invested $437.7 million in 2021-2023. It aims to invest $153.4 million in 2024.
Solvency & Liquidity
Primo Water’s times interest earned ratio (TIE) at the end of the first quarter of 2024 was 2.8. TIE ratio of more than one indicates that the company will be able to meet its interest payment obligations in the near term without any problems.
The current ratio at the end of the first quarter was 2.014, much higher than the industry’s average of 1.15. The ratio, being greater than one, indicates its ability to meet its future short-term liabilities without difficulties.
Price Performance
In the past year, the stock has returned 72.7% against the industry’s 5.3% decline
.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are California Water Service Group (CWT - Free Report) , IDACORP (IDA - Free Report) and MDU Resources Group (MDU - Free Report) . While California Water Service currently sports a Zacks Rank #1 (Strong Buy), IDA and MDU are holding a Zacks Rank of 2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CWT delivered an average earnings surprise of 85.16% in the last four quarters. The Zacks Consensus Estimate for 2024 EPS has moved up 40% in the past 60 days to $3.15.
IDA delivered an average earnings surprise of 85.16% in the last four quarters. The Zacks Consensus Estimate for 2024 EPS has risen 0.6% in the past 30 days to $5.35.
MDU’s long-term earnings growth is pinned at 6%. The Zacks Consensus Estimate for 2024 EPS has inched up 1.3% in the past 60 days to $1.55.