Financial Analysis: Primo Brands (NYSE:PRMB) and Coca-Cola FEMSA (NYSE:KOF)

Primo Brands (NYSE:PRMB) and Coca-Cola FEMSA (NYSE:KOF) are both consumer staples companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, valuation, profitability and institutional ownership.

Profitability

This table compares Primo Brands and Coca-Cola FEMSA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Primo Brands	13.63%	8.80%	3.62%
Coca-Cola FEMSA	8.12%	15.99%	7.55%

Insider & Institutional Ownership

87.7% of Primo Brands shares are owned by institutional investors. 2.5% of Primo Brands shares are owned by company insiders. Comparatively, 1.0% of Coca-Cola FEMSA shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Primo Brands has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Coca-Cola FEMSA has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Primo Brands and Coca-Cola FEMSA, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Primo Brands	0	0	1	0	3.00
Coca-Cola FEMSA	0	0	6	0	3.00

Primo Brands currently has a consensus price target of $33.00, suggesting a potential upside of 5.94%. Coca-Cola FEMSA has a consensus price target of $104.75, suggesting a potential upside of 32.98%. Given Coca-Cola FEMSA’s higher probable upside, analysts clearly believe Coca-Cola FEMSA is more favorable than Primo Brands.

Earnings & Valuation

This table compares Primo Brands and Coca-Cola FEMSA”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Primo Brands	$4.84 billion	1.03	$238.10 million	$1.61	19.35
Coca-Cola FEMSA	$267.59 billion	0.49	$1.16 billion	$5.89	13.37

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

Dividends

Primo Brands pays an annual dividend of $0.36 per share and has a dividend yield of 1.2%. Coca-Cola FEMSA pays an annual dividend of $0.69 per share and has a dividend yield of 0.9%. Primo Brands pays out 22.4% of its earnings in the form of a dividend. Coca-Cola FEMSA pays out 11.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Coca-Cola FEMSA beats Primo Brands on 8 of the 15 factors compared between the two stocks.

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.

About Coca-Cola FEMSA

Coca-Cola FEMSA, S.A.B. de C.V., a franchise bottler, produces, markets, sells, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Brazil, Argentina, and Uruguay. The company offers sparkling beverages, including colas and flavored sparkling beverages; waters; other non-carbonated beverages comprising juice drinks, coffee, teas, milk, value-added dairy products, sports and energy drinks, and plant-based drinks; and alcoholic beverages, such as hard seltzer under the Topo Chico brand name. It also distributes and sells Heineken, Estrella Galicia, Therezópolis, and Campari beer products, as well as Perfetti confectionary and chewing gum in its Brazilian territories; and Monster products. The company sells its products to distributors, retail outlets, wholesale supermarkets, discount and convenience stores, retailers, points-of-sale outlets, restaurants, bars, stadiums, auditoriums, theaters, and home deliveries. Coca-Cola FEMSA, S.A.B. de C.V. was founded in 1979 and is headquartered in Mexico City, Mexico.