03. Primo Water Corporation (NYSE:PRMW)
Number of Hedge Fund Holders: 31
Primo Water Corporation (NYSE:PRMW) is considered a water stock because it provides high-quality water solutions, ranging from spring and purified water to advanced water filtration products. The company’s diverse product offerings include bottled water, dispenser units, and water filtration systems, catering to residential and commercial customers. As of Q2 2024, the stock is held by 31 hedge funds, up from 27 in the previous quarter, indicating increased institutional confidence.
Primo Water Corporation (NYSE:PRMW) second-quarter earnings report highlights its strong financial performance despite missing EPS expectations. The reported EPS was $0.09912, lower than the expected $0.25, but the overall fundamentals remain positive. Total revenue for the quarter came in at $485 million, up 7.6% year-over-year, driven by a balanced mix of 3.1% volume growth and 4.5% pricing growth. This revenue growth was fueled by organic growth of 6.6%, reflecting healthy consumer demand and strength across Primo’s broad water solutions portfolio.
The company’s adjusted EBITDA surged to $113 million, an impressive 15% increase compared to the prior year. Notably, the EBITDA margin expanded to 23.3%, exceeding the high end of management’s guidance, which demonstrates Primo Water Corporation (NYSE:PRMW) ability to control costs and enhance profitability in a challenging economic environment. This margin expansion, coupled with a higher rate of free cash flow generation, underscores the company’s robust financial health and operational efficiency.
Primo Water Corporation (NYSE:PRMW) growth is also supported by strong demand for its premium product offerings like Mountain Valley Spring water, which saw an 87% increase in retail revenue. The company’s focus on sustainability and responsible water source management further strengthens its market position as a leading player in the North American water category.
The acquisition of BlueTriton Brands, which is expected to bring in significant synergies and enhance Primo Water Corporation (NYSE:PRMW) market share, is another catalyst for future growth. As consumers continue to prioritize healthier lifestyles and sustainable water solutions, Primo Water Corporation (NYSE:PRMW) is well-positioned to benefit from these long-term trends. With its balanced revenue streams between residential and commercial customers, Primo Water Corporation (NYSE:PRMW) remains a compelling investment in the growing water sector.
Carillon Chartwell Small Cap Value Fund stated the following regarding Primo Water Corporation (NYSE:PRMW) in its Q2 2024 investor letter:
“Primo Water Corporation (NYSE:PRMW) markets and distributes water, water dispensers, and filtration systems to residential and commercial customers across the United States. Stronger results driven by better volumes, pricing and margins, along with a return to growth in dispenser placements, excited investors. The company was also rewarded for announcing the sale of its European business. Late in the quarter the company announced a combination with another large water company that should result in sizeable integration synergies.”
