REYN
Reynolds Consumer Products Inc
Consumer
05/18/2020
Presented
| Date | 05/14/2020 |
| Price | $33.70 |
| Market Cap | $7.07B |
| Ent Value | $7.82B |
| P/E Ratio | 26.87x |
| Book Value | $6.53 |
| Div Yield | 0.45% |
| Shares O/S | 209.70M |
| Ave Daily Vol | 804,666 |
| Short Int | 0.71% |
Current
| Price | $30.44 |
| Market Cap | $6.40B |
| Reynolds Consumer Products, Inc. manufactures and sells household products. It operates through the following segments: Presto Products, Reynolds Cooking & Baking, Hefty Waste & Storage and Hefty Tableware. The Reynolds Cooking & Baking segment produces branded and store brand foil, disposable aluminum pans, parchment paper, freezer paper, wax paper, plastic wrap, baking cups, oven bags and slow cooker liners. The Hefty Waste & Storage segment produces both branded and store brand trash and food storage bags. Its products are sold under the Hefty Ultra Strong, Hefty Strong Trash Bags, Hefty Renew and Hefty Slider Bags brands. The Hefty Tableware segment sells both branded and store brand disposable and compostable plates, bowls, platters, cups and cutlery. The Presto Products segment sells store brand products in four main categories including food storage bags, trash bags, reusable storage containers and plastic wrap. The company was founded in 2010 and is headquartered in Lake Forest, IL. |
Publicly traded companies mentioned herein: Alcoa Corp (AA), Church & Dwight (CHD), Clorox (CLX), Reynolds Consumer Products Inc (REYN)
Highlights
The presenter is long shares of Reynolds Wrap aluminum foil and Hefty trash bags maker Reynolds Consumer Products (REYN) due to a favorable risk/reward setup and outlook for sales growth. REYN’s products, including private label, are in 95% of US households, and it has either the #1 or #2 product in each of its categories. REYN also aims to have new products drive 20% of sales, and management has been successful with that strategy over the past few years. In his opinion, the stock came public with an excessive discount in late January ‘20 for a household brand consumer staples company, yielding ~3% and trading at a steep discount to peers. COVID-19 has been positive for REYN, and third-party data suggests that its sell-through is tracking +30% this quarter; at the same time, input costs (aluminum and resin) are falling, providing a margin tailwind. Looking out to 2021, REYN may be able to earn $2.30/share (37 cents ahead of Street estimates), and if the multiple can expand to 20x (from 17x - 18x), investors would see at least 40% upside (to the high $40s).
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