REYN - Reynolds Consumer Products: Further Evidence Of Financial Improvement Required

2024-04-05 15:05:34 ET

Summary

• REYN’s revenue growth has been respectable, with a CAGR of +4% since FY16. The business has strong retail relationships and is a market leader in its segments.
• REYN has experienced a deterioration in financial performance due to inflation and fundamental weakness, with a period of recovery underway to improve margins and establish a better growth trajectory.
• REYN’s recent performance has been muted, owing to a degree of reliance on the housing market, alongside soft consumer demand.
• REYN’s performance relative to its peers is lacking, although we see a route to outperformance if margin growth continues to be delivered and growth can be maintained.
• REYN appears reasonably valued, with an FCF yield of ~6%. We rate the stock a hold for these reasons.

Introduction And Thesis

Reynolds Consumer Products Inc. ( REYN ) is a leading consumer goods company known for its innovative and sustainable solutions. The company is recognized for its iconic brands like Reynolds Wrap and Hefty, offering a wide range of products including food storage, aluminum foil, and disposable tableware....

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