No-Moat Primo Water’s Solid End to 2022 Proves Strength of Its Strategic Playbook; Shares a Bargain

Although no-moat Primo Water’s mixed fiscal 2022 fourth-quarter results initially sent the shares down 5%, we think the market is overly fixated on near-term economic turbulence. Given that the firm’s fiscal 2023 outlook ($2.3 billion-$2.35 billion in revenue and $450 million-$470 million in adjusted EBITDA) already aligns with our forecast ($2.3 billion and $458 million, respectively), we don’t plan to materially alter our $21.50 fair value estimate. Shares now trade at a roughly 27% discount to our existing intrinsic valuation, offering a compelling buying opportunity.