Primo Water Corporation PRMW is a captivating prospect for investors eyeing the utility sector, with its promising growth trajectory, solid dividend track record, and burgeoning earnings forecasts. Let’s delve into the reasons why this Zacks Rank #2 (Buy) stock is currently shining brightly on the investment horizon.
Embracing Growth & Surprises
Over the past 60 days, the Zacks Consensus Estimate for Primo Water’s 2024 EPS surged by 17.33% to 88 cents and the forecast for its 2025 EPS climbed significantly by 48.6% to $1.07. Moreover, Primo Water’s long-term earnings growth rate stands at a healthy 12.9%, painting a rosy picture of its future prospects.
A Rich Return on Equity
With a Return on Equity (ROE) soaring at 8.55%, above the sector average of 8.46%, Primo Water proves its mettle in utilizing capital efficiently to yield handsome returns. The company’s superior ROE in the utility realm signifies its adeptness at maximizing returns compared to its industry peers.
Sturdy Solvency & Liquidity
Primo Water’s Times Interest Earned (TIE) ratio at the close of Q4 in 2023 stood at an impressive 2.3, indicating the company’s robust ability to meet its interest obligations without strain in the foreseeable future. Furthermore, the current ratio of 2.03 by the end of Q4 outperforms the industry standard of 0.77, elucidating Primo Water’s sound capacity to meet upcoming short-term liabilities with ease.
History of Dividends
Extending its commitment to its shareholders, Primo Water’s dividend payouts have been on an upward trajectory. The recent hike in the quarterly dividend to 9 cents per share, showcasing a 12.5% increase from the earlier 8 cents per share, reinforces Primo Water’s dedication to enhancing shareholder value. Notably, PRMW’s current dividend yield of 2.01% surpasses the Zacks S&P 500 composite’s yield by a notable margin.
Impressive Price Performance
Impressively, over the past three months, Primo Water’s stock has outperformed the industry, delivering a remarkable return of 20.2% against the industry’s 5.1% decline, propelling the stock into the limelight as a standout performer.
Image Source: Zacks Investment Research
Considering Other Gems
Exploring further within the industry, other top-ranked stocks to ponder include American States Water AWR, American Water Works AWK, and Consolidated Water CWCO, each boasting a Zacks Rank #2 currently. These stocks present additional avenues for potential growth and opportunities within the utility sector.
Each stock is rooted in strong fundamentals and stands tall within the competitive landscape, holding promise for investors seeking potential winners in their portfolios.
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Please note that opinions expressed in this article are those of the author’s and do not necessarily reflect the views of Nasdaq, Inc.
