Financial Analysis: Primo Water (PRMW) versus SpartanNash (SPTN)

Primo Water (NASDAQ: PRMW) and SpartanNash (NASDAQ:SPTN) are both small-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Dividends

SpartanNash pays an annual dividend of $0.72 per share and has a dividend yield of 4.0%. Primo Water does not pay a dividend. SpartanNash pays out 34.3% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Primo Water and SpartanNash’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Primo Water $286.07 million 1.36 -$6.35 million ($0.28) -44.79
SpartanNash $8.13 billion 0.08 -$52.84 million $2.10 8.66

Primo Water has higher earnings, but lower revenue than SpartanNash. Primo Water is trading at a lower price-to-earnings ratio than SpartanNash, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Primo Water and SpartanNash’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Primo Water -2.22% -15.66% -2.67%
SpartanNash -0.65% 10.08% 3.71%

Risk & Volatility

Primo Water has a beta of -0.13, indicating that its stock price is 113% less volatile than the S&P 500. Comparatively, SpartanNash has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Primo Water and SpartanNash, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Primo Water 0 1 2 0 2.67
SpartanNash 1 4 1 0 2.00

Primo Water presently has a consensus price target of $19.00, indicating a potential upside of 51.52%. SpartanNash has a consensus price target of $22.20, indicating a potential upside of 22.05%. Given Primo Water’s stronger consensus rating and higher probable upside, research analysts clearly believe Primo Water is more favorable than SpartanNash.

Insider & Institutional Ownership

68.9% of Primo Water shares are held by institutional investors. Comparatively, 89.5% of SpartanNash shares are held by institutional investors. 13.5% of Primo Water shares are held by company insiders. Comparatively, 2.4% of SpartanNash shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

SpartanNash beats Primo Water on 9 of the 16 factors compared between the two stocks.

Primo Water Company Profile

Primo Water Corporation, together with its subsidiaries, provides multi-gallon purified bottled water, self-service refill water, and water dispensers in the United States and Canada. It operates in three segments: Refill, Exchange, and Dispensers. The Refill segment sells filtered drinking water dispensed directly to consumers through self-service machines. The Exchange segment sells multi-gallon purified bottled water through point of purchase display racks and recycling centers. The Dispensers segment sells water dispensers that are designed to dispense Primo and other dispenser-compatible bottled water. As of March 6, 2018, the company offers its products and services at approximately 45,000 retail locations, as well as online. Primo Water Corporation was founded in 2004 and is headquartered in Winston-Salem, North Carolina.

SpartanNash Company Profile

SpartanNash Company distributes and retails grocery products. It operates in three segments: Food Distribution, Military, and Retail. The Food Distribution segment offers approximately 60,000 stock-keeping units, such as dry groceries, produce, dairy products, meat, delicatessen items, bakery goods, frozen food, seafood, floral products, general merchandise, beverages, tobacco products, health and beauty care, and pharmacy products to independent retail locations, food service distributors, and corporate-owned retail stores. This segment also offers various value-added services to retailers. The Military segment sells and distributes grocery products to military commissaries and exchanges located in 45 states across the United States and the District of Columbia, Europe, Cuba, Puerto Rico, Italy, Bahrain, Djibouti, and Egypt. The Retail segment primarily operates neighborhood supermarkets. As of December 30, 2017, this segment operated 145 owned retail stores in the Midwest region primarily under the Family Fare Supermarkets, D&W Fresh Markets, VG's Grocery, Dan's Supermarket, and Family Fresh Market banners; and offered pharmacy services in 87 of its stores, as well as operated 31 fuel centers at its retail stores. SpartanNash Company also markets and distributes private brand items primarily under the Our Family, Open Acres, Top Care, Tippy Toes, Full Circle, Culinary Tours, PAWS Premium, Valu Time, Freedom's Choice, and Home Base brands. The company was formerly known as Spartan Stores, Inc. and changed its name to SpartanNash Company in November 2013. SpartanNash Company was founded in 1917 and is headquartered in Grand Rapids, Michigan.

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