Primo Water has a beta of 0.0721. Let's try to break down what Primo's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, Primo Water will likely underperform. The beta indicator helps investors understand whether Primo Water moves in the same direction as the rest of the market, and how volatile (i.e., risky) it is compared to the market (i.e., selected benchmark). In other words, if Primo deviates very little from the market, it does not add much risk to the portfolio, but it also doesn't increase the expected returns.
There are currently many different techniques concerning forecasting the market as a whole as well as
predicting future values of individual securities such as Primo Water Corp. Regardless of method or technology, to accurately forecast the stock market is more a matter of luck rather than a particular technique. Nevertheless, trying to predict the stock market accurately is still an essential part of the overall investment decision process. Using different forecasting techniques and comparing the results might improve your chances of accuracy even though unexpected events may often change the
market sentiment and impact your forecasting results.
Predictive Modules for Primo Water
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of Primo Water's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Primo Water. Your research has to be compared to or analyzed against Primo Water's peers to derive any actionable benefits. When done correctly, Primo Water's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Primo Water Corp.
How important is Primo Water's Liquidity
Primo Water
financial leverage refers to using borrowed capital as a funding source to finance Primo Water Corp ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Primo Water financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Primo Water's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Primo Water's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Primo Water's total debt and its cash.
Primo Water Gross Profit
Primo Water Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Primo Water previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Primo Water Gross Profit growth over the last 10 years. Please check Primo Water's
gross profit and other
fundamental indicators for more details.
Breaking it down
Primo Water currently demonstrates below-verage downside deviation. It has Information Ratio of 0.12 and Jensen Alpha of 0.53. However, we do advice investors to further question Primo Water expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.
Returns Breakdown
| Return on Investment | (13.06) |
| Return on Assets | (15.14) |
| Return on Equity | (61.05) |
| Return Capital | 0.0612 |
| Return on Sales | 0.0292 |
Over 3 percent climb for Primo Water. What does it mean for sophisticated investors?
Primo Water latest total risk alpha rises over 0.17. Primo Water currently demonstrates below-verage downside deviation. It has Information Ratio of 0.12 and Jensen Alpha of 0.53. However, we do advice investors to further question Primo Water expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.
The Bottom Line
While few other entities within the beverages—non-alcoholic industry are still a little expensive, even after the recent corrections, Primo Water may offer a potential longer-term growth to sophisticated investors. While some sophisticated investors may not share our view, we believe it may be a good time to increase your existing holdings in Primo as the risk-reward trade off is appealing enough to hold a position. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Primo Water.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Primo Water Corp. Please refer to our
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