REYN

Reynolds Consumer Products ($REYN) Insiders Aggressively Buy at Lows as CAO Reverses Course After 8 Months

06/02/2025 11:38

Reynolds Consumer Products ($REYN) Chief Accounting Officer Chris Mayrhofer made headlines with substantial stock purchases near the company's yearly lows in late May, marking a dramatic reversal from his previous selling pattern. This shift from his September 2024 high-price sale to aggressive buying at current levels signals potential value recognition by company insiders. According to SEC filings, Mayrhofer purchased a total of 23,265 shares over two days (May 29-30) for approximately $514,318, with average prices of $22.14 and $21.99 per share. This contrasts sharply with his September 13, 2024 sale of 18,000 shares at $32.01 per share, representing a 31% discount to his previous exit price. The CAO's willingness to purchase at significantly higher volume at lower prices demonstrates strong conviction in the company's current valuation. The insider buying pattern extends beyond Mayrhofer. Director Rolf Stangl has been consistently accumulating shares since November 2024, purchasing 7,207 shares in November, 3,682 shares in December, 6,000 shares in February, and an additional 5,000 shares across two consecutive days in May. Stangl's total accumulation of 19,389 shares worth approximately $570,000 represents steady buying throughout the stock's decline. This insider confidence comes amid challenging operational headwinds for Reynolds Consumer Products. The company reported Q1 2025 revenue of $818 million, down 1.8% year-over-year, with earnings per share falling to $0.15 from $0.23 in the prior year period. Retailer destocking and tariff-related cost pressures have weighed on near-term performance, with full-year 2025 guidance calling for low single-digit revenue declines and adjusted EPS of $1.54-$1.61, slightly below consensus estimates. Reynolds Consumer Products, founded in 1947 and headquartered in Lake Forest, Illinois, is a leading manufacturer of household consumer products including aluminum foil, trash bags, food storage solutions, and disposable tableware under brands like Reynolds Wrap and Hefty. The company reaches approximately 95% of U.S. households and maintains No. 1 or No. 2 market positions in most product categories it serves. Despite recent headwinds, the company's fundamental competitive position remains strong. Reynolds holds dominant market share in aluminum foil (Reynolds Wrap), trash bags (Hefty), and food storage categories, with products distributed through grocery stores, mass merchants, warehouse clubs, and e-commerce platforms. The essential nature of these household products provides relatively stable demand even during economic downturns. The current challenging environment stems primarily from external factors rather than company-specific issues. Tariff pressures from the Trump administration's trade policies have increased input costs, while retail partners have been reducing inventory levels as they adjust to post-pandemic demand patterns. Management is responding with pricing actions of 2-4 percentage points to offset cost inflation, though volume pressures remain in the near term. From a valuation perspective, $REYN trades at compelling levels that may justify insider confidence. The stock's forward P/E ratio of 13.3-14.0x compares favorably to industry averages of 15-18x, while the dividend yield of approximately 4.0% significantly exceeds sector norms of 2-3%. The company's 53-year dividend payment history and current payout ratio of 57% suggest sustainability of the quarterly $0.23 dividend. Financial health metrics support the insider buying thesis. The company successfully refinanced its term loan facility in Q1 2025, extending maturity to 2032 and enhancing financial flexibility. Net debt-to-EBITDA remains at a manageable 2.3x within the company's target range, while return on equity of 16.25% and return on assets of 7% exceed industry averages despite recent margin pressures. Looking ahead, several factors could drive stock recovery. Pricing actions should begin offsetting tariff headwinds in the second half of 2025, while retail inventory normalization could restore volume growth. The company's guidance for Q2 2025 projects revenue decline of 2-5% year-over-year, but adjusted EBITDA guidance of $155-165 million suggests margin stabilization efforts are taking hold. The technical chart shows $REYN declining from $27.75 in June 2024 to current levels around $22, representing approximately 20% downside. However, the concentration of insider buying near $22 has established this level as potential support, with limited downside risk given the company's stable cash flow generation and attractive valuation metrics. For income-focused investors, Reynolds Consumer Products offers compelling risk-adjusted returns through its 4% dividend yield backed by stable cash flows from essential household products. The combination of insider confidence, attractive valuation, and defensive product portfolio positions the stock as a potential value opportunity despite near-term operational challenges. The aggressive insider buying at current levels provides an important signal that fundamental value may exceed current market pricing.

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