Head-To-Head Comparison: Reeds (OTCMKTS:REED) versus Luckin Coffee (OTCMKTS:LKNCY)

Reeds (OTCMKTS:REED) and Luckin Coffee (OTCMKTS:LKNCY) are both consumer staples companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

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%

Analyst Ratings

This is a summary of current ratings and recommmendations for Reeds and Luckin Coffee, as provided by MarketBeat.

	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 currently has a consensus price target of $1.75, indicating a potential upside of 73.27%. Luckin Coffee has a consensus price target of $52.00, indicating a potential upside of 34.23%. Given Reeds’ higher possible upside, equities analysts clearly believe Reeds is more favorable than Luckin Coffee.

Risk & Volatility

Reeds has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, Luckin Coffee has a beta of -0.36, meaning that its share price is 136% less volatile than the S&P 500.

Institutional and Insider Ownership

51.5% of Reeds shares are held by institutional investors. Comparatively, 0.5% of Luckin Coffee shares are held by institutional investors. 88.0% of Reeds shares are held by company insiders. Comparatively, 2.7% of Luckin Coffee shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Reeds and Luckin Coffee”s top-line 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.

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.