Analysis: Primo Brands (PRMB)

Primo boosted by BlueTriton’s sales, saddled with BlueTriton’s burdens.

Water Sector LTP initiated coverage of Primo Brands Corporation (NYSE:PRMB) on 9/22/25 when the stock price was $22.26.

Since PRMB’s one-year high, at $35.63 on 4/3/25, the stock has fallen by 38%, to $21.95 on 10/7/25. Is this a dip-buying opportunity? To answer that question, we must examine the company’s big merger less than a year ago.

In November 2024, Tampa-based Primo Water and Stamford-based BlueTriton Brands merged in an all-stock deal. Primo Water’s market cap was less than $3 billion, while BlueTriton was a private company owned by two private equity firms. Now with a market cap of $8.28 billion, the combined company, known as Primo Brands with headquarters in Tampa, is a leading branded beverage company in North America with a focus on “healthy hydration,” i.e., convenient drinking water.

We’ve seen only two quarters of financial results for the combined company. We will glance at PRMB’s 2Q 2025 profits and debt, but we’ll focus more closely on PRMB’s expanded product lineup. And we’ll address these questions: Does the merger make sense strategically? Does the merger benefit long-term investors?

We will also consider (a) growing consumer sentiment against plastic packaging, and (b) the pending class action lawsuit against PRMB, which it inherited from BlueTriton, which inherited it from Nestle Waters North America Inc., relating to the marketing of its Poland Springs bottled water.

Combined product lineup

Before the merger of November 2024, Primo Water sold large-format (3 gallons or more) dispensers of purified, spring, and mineral water to households and business, largely under a recurring revenue model. About 13% of its sales involved refilling water dispensers at 23,500 self-serve locations, and selling water filtration systems. Primo had exited from the small-format retail water business back in 2022, touting its reduction in the use of single-use plastic bottles by about 400 million annually, while also improving overall margins.

Before November 2024, BlueTriton owned a line of bottled water brands that it had purchased from Nestle Waters in 2021, including Poland Springs, Ice Mountain, Arrowhead, Pure Life, Saratoga, Mountain Valley, and Zephyrhills.

Since November 2024, the combined company, Primo Brands, has experienced “integration disruptions,” which CEO Robbert Rietbroek referred to in PRMB’s 2Q earnings call. Of course he said such disruptions will be minimized to allow for “smoother transitions in upcoming phases.”

PRMB sources its water from 90 freshwater springs, 38 of which the company owns or operates under a joint venture, and the rest of which are leased; and all of which PRMB claims to manage “for long-term sustainability.” Most of the springs are located in Maine, Pennsylvania, California, Florida, Michigan, and Texas.

Although PRMB can no longer tout its reduction of plastic bottles as it did in 2022, it now says, “We are at the forefront of reusable and circular packaging, helping to reduce waste through our reusable, multi-serve bottles and innovative brand packaging portfolio that incorporates recycled plastic, aluminum, and glass.” [PRMB’s 2024 Annual Report, Form 10-K] We’ll look further at changing consumer attitudes toward plastic below.

PRMB does have something new to tout: its combined distribution network across North America – with 240 depots for logistics/deliveries across North America, and a delivery fleet of over 5,900 vehicles. But will that advantage help to overcome the difficulty of addressing two distinct markets: the small-format consumer and the large-format consumer? Not so easily, I believe. PRMB has not acknowledged this distinction in its most recent 10-K and 10-Q filings. Kheri Tillman, chief marketing officer, has her work cut out for her. She came to PRMB from BlueTriton, and before 2022 was a marketing VP at Harman International, a high-end audio manufacturer. She does have experience at Heineken N.V. and Kraft Foods Group (now H.J. Heinz) – about 20 years total in marketing and sales.

Quantities

In the most recent quarter, 2Q 2025, PRMB’s net sales declined 2.5% year-over-year. The “disappointing” results were partly due to “temporary factors” like bad weather in the Northeast and a tornado in Texas that damaged production facilities, says William Blair Research. (Blair maintains its OUTPERFORM rating. Goldman Sachs rated the stock NEUTRAL in September 2025. Zacks issued a SELL rating in August.) Premium water sales increased YoY, led by Saratoga and Mountain Valley brands; but large-format sales dropped.

PRMB’s price-earnings ratio is just over 39, putting it in the bottom 25% of its industry (per FinanceCharts.com).

PRMB calls its own debt “substantial.” [source: 2024 Form 10-K] The debt-to-equity ratio is 1.76, which is high but not dangerously so. The average debt/equity ratio for the non-alcoholic beverage industry in October 2025 is about 0.86, according to Full:Ratio. PRMB’s interest coverage ratio is about 1, which is low but not dangerously so.

Risk A: Water

Access to fresh water was never taken for granted in the beverage industry, but is becoming more critical and uncertain as scarcity and contamination afflict freshwater resources. “Water scarcity, government regulation of water access, loss of water rights, and poor quality could negatively affect our long-term financial performance,” PRMB warns in its 10-K risk disclosures.

In PRMB’s press release of 11/8/24, announcing the merger, it claimed that “Primo Brands sources from numerous springs and manages water resources for long-term sustainability, helping to protect more than 27,000 acres of watershed and wetlands area [sic] owned by the Company for preservation and to help assure a steady supply of clean, safe drinking water.” Sustainability is the new buzz word, used carelessly by some marketers and fraudulently by a few (also known as greenwashing). But PRMB at least puts its money where its spigot is. In August 2025, PRMB announced that it joined forces with River Partners, a California nonprofit “driving large-scale river and floodplain restoration, [to help] revitalize key portions of the Sacramento and Feather Rivers.”

Risk B: Plastic

Consumers, even those who were gleefully gaslighted by Big Tobacco with respect to cancer and Big Fossil Fuel with respect to climate, don’t want to be gaslighted again by Big Plastic with respect to microplastics in babies’ bloodstreams. An article in Science (1/2/25) bears the title, “Microplastics in the bloodstream can induce cerebral thrombosis.”

Consumers are scared and angry. Bans and lawsuits are forthcoming. “Bans on the commercial sale or government procurement of bottled water in plastic beverage containers could adversely affect our business and financial results,” says PRMB in its risk disclosures. “In addition, there is growing concern about the presence of PFAS, microplastics, and nano plastics in public water supplies.” Furthermore:

In recent years, there has been some legislative and executive action in state and local governments that has banned the use of bottled water in municipal buildings. Some have also enacted local taxes on bottled water or tried to limit its sale. This is a potential risk for the company, as such legislation is highly discretionary in nature. It's also not impossible for RFK Jr. in the HHS to eventually target bottled water (for its microplastics content) in some way. [PRMB 2024 Form 10-K]

PRMB is at least trying to get ahead of consumer sentiment: In August 2025, Casella Waste Systems, a regional solid waste and recycling company based in Vermont, recognized PRMB as one of four winners of its annual Sustainability Leadership Awards. “Primo has achieved a 90% recycling rate for fiber, metal, and plastic” in Casella’s operating region that includes ME, NY, and MA.

Risk C: Poland ‘Spring’

On 12/31/24, a federal judge in Connecticut refused to dismiss the class action lawsuit accusing the former Nestle Waters of overcharging consumers for Poland Springs bottled water that it falsely labeled as “spring water” from 1992 to at least 2017, according to the complaint in Patane v. Nestle Waters North America (U.S. District Court, District of Connecticut, No. 17-01381). The lawsuit alleges common law fraud, violations of certain consumer protection laws in nine states and, for home and office customers, breach of contract. We won’t discuss the merits of the case in this analysis, but we’re talking about billions of gallons of bottled water sold over decades, so the legal exposure is deep, and PRMB is on the hook for it.

"Poland Spring brand bottled water is 100% spring water," PRMB said in response to the judge’s ruling on New Year’s Eve 2024. "We remain confident in our position and look forward to successfully defending against the remaining claims."

Recommendation

I liked Primo Water before 2024, when it emphasized refill-and-replace, with concomitant higher margins. As a result of the merger with BlueTriton, though, PRMB is saddled with BlueTriton’s higher risks and lower margins. Water Sector LTP issues a SELL recommendation on 10/7/25, as the stock closes at $21.95.