UTZ

We rate Utz Brands, Inc. (UTZ) as a Reduce with a composite score of 43.7/100 at a current price of $9.60. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (70th percentile) and value (52th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (27th percentile) and investment (44th percentile) tempers our overall conviction. We assign a No Moat rating (29/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Utz Brands, Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.7/100 places it at rank #3026 in our full 7,333-stock universe. At $1.0B in market capitalization, Utz Brands, Inc. is a small-cap player in the Manufacturing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 6%, though momentum at the 27th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 27% (-15.1pp vs sector) narrow to operating margins of 2% (+1.1pp vs sector) and net margins of -0.2%, yielding a gross-to-net conversion rate of -1%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $9.60, Utz Brands, Inc. is trading near fair value based on current fundamentals. Our value factor score of 52/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 953.0x (a 4183% premium to the sector median of 22.3x), EV/EBITDA of 49.0x (at a premium), P/B of 0.6x, P/S of 0.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to Utz Brands, Inc.. The stock presents a balanced risk profile: current negative profitability (net margin -0.2%) and low beta of 0.29 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -0.2%); low beta of 0.29 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 953.0x) that leaves limited margin for error; the combination of leverage (63% D/E) and thin margins (-0.2% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 70th percentile and quality factor at the 47th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (70th percentile) suggests predictable business dynamics; a 2.10% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Utz Brands, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-0.3%), negative profitability, weak asset returns (ROA -0.1%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Utz Brands, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Utz Brands, Inc. receives a Reduce rating with a composite score of 43.7/100 (rank #3026 of 7,333). Our quantitative framework assigns a No Moat (29/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 48/100.

Our analysis does not support a constructive view on Utz Brands, Inc. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.