Definitive Analysis
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Primo Water Corporation (PRMW)

Company Dividend Discount ModelIndustry: Beverages - Non-AlcoholicSector: Consumer Defensive

Valuation Snapshot

Stable Growth$11.17 - $24.39$16.02
Multi-Stage$9.39 - $10.24$9.80
Blended Fair Value$12.91
Current Price$24.98
Upside-48.31%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2023202220222021201920182017201620162015
DPS9.53%9.17%0.330.270.240.260.210.210.210.190.140.13
YoY Growth--20.75%13.08%-7.52%25.37%-0.43%0.00%6.37%35.83%6.33%-0.73%
Dividend Yield--1.79%1.76%1.65%1.55%2.35%1.34%1.77%1.44%1.33%2.58%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)93.27
(-) Cash Dividends Paid (M)57.16
(=) Cash Retained (M)36.11
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)18.6511.667.00
Cash Retained (M)36.1136.1136.11
(-) Cash Required (M)-18.65-11.66-7.00
(=) Excess Retained (M)17.4624.4529.11
(/) Shares Outstanding (M)161.10161.10161.10
(=) Excess Retained per Share0.110.150.18
LTM Dividend per Share0.350.350.35
(+) Excess Retained per Share0.110.150.18
(=) Adjusted Dividend0.460.510.54
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate4.75%5.75%6.75%
Fair Value$11.17$16.02$24.39
Upside / Downside-55.29%-35.87%-2.36%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)93.2798.63104.31110.31116.66123.37127.07
Payout Ratio61.28%67.03%72.77%78.51%84.26%90.00%92.50%
Projected Dividends (M)57.1666.1175.9186.6198.29111.03117.54

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate4.75%5.75%6.75%
Year 1 PV (M)60.0360.6061.17
Year 2 PV (M)62.5763.7764.99
Year 3 PV (M)64.8266.7068.61
Year 4 PV (M)66.8069.3872.05
Year 5 PV (M)68.5171.8475.30
PV of Terminal Value (M)1,189.301,247.161,307.25
Equity Value (M)1,512.031,579.461,649.37
Shares Outstanding (M)161.10161.10161.10
Fair Value$9.39$9.80$10.24
Upside / Downside-62.43%-60.75%-59.02%

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