Critical Survey: Primo Brands (NYSE:PRMB) & Fomento Económico Mexicano (NYSE:FMX)

Primo Brands (NYSE:PRMB) and Fomento Económico Mexicano (NYSE:FMX) are both large-cap consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Volatility and Risk

Primo Brands has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Fomento Económico Mexicano has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Earnings and Valuation

This table compares Primo Brands and Fomento Económico Mexicano”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Primo Brands	$1.77 billion	6.98	$238.10 million	$1.61	20.25
Fomento Económico Mexicano	$755.75 billion	0.04	$3.89 billion	$3.90	21.52

Fomento Económico Mexicano has higher revenue and earnings than Primo Brands. Primo Brands is trading at a lower price-to-earnings ratio than Fomento Económico Mexicano, 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 1.1%. Fomento Económico Mexicano pays an annual dividend of $0.79 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. Fomento Económico Mexicano pays out 20.3% 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.

Institutional and Insider Ownership

87.7% of Primo Brands shares are owned by institutional investors. Comparatively, 61.0% of Fomento Económico Mexicano shares are owned by institutional investors. 2.5% of Primo Brands shares are owned by company insiders. Comparatively, 5.7% of Fomento Económico Mexicano shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Primo Brands and Fomento Económico Mexicano’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%
Fomento Económico Mexicano	3.22%	8.37%	3.79%

Analyst Recommendations

This is a summary of current ratings and price targets for Primo Brands and Fomento Económico Mexicano, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Primo Brands	0	0	3	0	3.00
Fomento Económico Mexicano	0	3	1	0	2.25

Primo Brands currently has a consensus price target of $37.00, indicating a potential upside of 13.51%. Fomento Económico Mexicano has a consensus price target of $126.33, indicating a potential upside of 50.51%. Given Fomento Económico Mexicano’s higher probable upside, analysts clearly believe Fomento Económico Mexicano is more favorable than Primo Brands.

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 Fomento Económico Mexicano

Fomento Económico Mexicano, S.A.B. de C.V., through its subsidiaries, operates as a bottler of Coca-Cola trademark beverages. The company produces, markets, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil, Argentina, and Uruguay. It also operates small-box retail chain stores in Mexico, Colombia, Peru, Chile, and Brazil under the OXXO name; retail service stations for fuels, motor oils, lubricants, and car care products under the OXXO GAS name in Mexico; and drugstores in Chile, Colombia, Ecuador, and Mexico under the Cruz Verde, Fybeca, SanaSana, YZA, La Moderna, and Farmacon names. In addition, the company is involved in the production and distribution of collers, commercial refrigeration equipment, plastic boxes, food processing, and preservation and weighing equipment; and provision of logistic transportation, distribution and maintenance, point-of-sale refrigeration, and plastics solutions, as well as distribution platform for cleaning products and consumables. Further, it operates small-box retail and food convenience chain stores in Switzerland, Germany, Austria, Luxembourg, and the Netherlands under the k kiosk, Brezelkönig, BackWerk, Ditsch, Press & Books, avec, Caffè Spettacolo, and ok.) names, as well as pretzels under the Ditsch name. The company was founded in 1890 and is based in Monterrey, Mexico.