Reeds (OTCMKTS:REED – Get Free Report) and Luckin Coffee (OTCMKTS:LKNCY – Get Free Report) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.
Profitability
This table compares Reeds and Luckin Coffee’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Reeds | -43.28% | N/A | -69.61% |
| Luckin Coffee | 9.59% | 36.80% | 18.33% |
Earnings and Valuation
This table compares Reeds and Luckin Coffee”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Reeds | $50.78 million | 0.97 | -$13.15 million | ($1.22) | -0.83 |
| Luckin Coffee | $4.72 billion | 2.33 | $401.71 million | $1.76 | 22.01 |
Luckin Coffee has higher revenue and earnings than Reeds. Reeds is trading at a lower price-to-earnings ratio than Luckin Coffee, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for Reeds and Luckin Coffee, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Reeds | 0 | 0 | 1 | 0 | 3.00 |
| Luckin Coffee | 0 | 0 | 1 | 0 | 3.00 |
Reeds presently has a consensus target price of $1.75, indicating a potential upside of 73.27%. Luckin Coffee has a consensus target price of $52.00, indicating a potential upside of 34.23%. Given Reeds’ higher possible upside, equities research analysts plainly believe Reeds is more favorable than Luckin Coffee.
Risk & Volatility
Reeds has a beta of 0.21, indicating that its stock price is 79% less volatile than the S&P 500. Comparatively, Luckin Coffee has a beta of -0.36, indicating that its stock price is 136% less volatile than the S&P 500.
Institutional & Insider Ownership
51.5% of Reeds shares are owned by institutional investors. Comparatively, 0.5% of Luckin Coffee shares are owned by institutional investors. 88.0% of Reeds shares are owned by insiders. Comparatively, 2.7% of Luckin Coffee shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
Luckin Coffee beats Reeds on 8 of the 12 factors compared between the two stocks.
About Reeds
Reed's, Inc. engages in the manufacture and distribution of natural beverages in the United States. The company offers Reed's craft ginger beer; Reed's real ginger ales; Reed's Classic Mules; Reed's Hard Ginger Ale; Reed's ready to drink products; and Virgil's handcrafted sodas. It sells its products to natural food and gourmet retailers, grocery store chains, mass merchants, club stores, convenience and drug stores, liquor stores, industrial cafeterias, and on-premise bars and restaurants, as well as directly to consumers through www.drinkreeds.com. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is headquartered in Norwalk, Connecticut.
About Luckin Coffee
Luckin Coffee Inc. offers retail services of freshly brewed drinks, and pre-made food and beverage items in the People's Republic of China. It offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers Luckin Pop premium instant coffee and inspirational cups through mobile apps and e-commerce platforms. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company offers technical and consultation services; and manufactures materials for products. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.
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