Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

Betterware de Mexico Sab de CV / Equity Bottom-Up

<ul><li>We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico after reviewing the December catalog.</li><li>With the Holidays in full force, management has remained focused on driving higher overall returns and offering proven and winning items.</li><li>December was another month of lower YoY SKUS, reduced discounting and near record average SKU pricing.</li></ul>

We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico after reviewing the December catalog.With the Holidays in full force, management has remained focused on driving higher overall returns and offering proven and winning items.December was another month of lower YoY SKUS, reduced discounting and near record average SKU pricing.

BWMX: Snapping the Catalog: Remaining Focused on Returns; Reiterate Buy, PT

<ul><li>We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico after reviewing the November catalog.</li><li>November marks the start of the Holiday season, with Betterware delivering winners in multiple categories and fully focused on strong initial seasonal sales.</li><li>The division is also highly focused on driving solid returns (and margins) for investors.</li></ul>

We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico after reviewing the November catalog.November marks the start of the Holiday season, with Betterware delivering winners in multiple categories and fully focused on strong initial seasonal sales.The division is also highly focused on driving solid returns (and margins) for investors.

BWMX: Snapping the Catalog: Holiday Cheer, Delivered with Higher Returns

<ul><li>We are reiterating our Buy rating and $22.50 price target and reducing our 4Q25 and 2026 projections for Betterware de Mexico after the company announced 3Q results which registered strong margin growth and weaker than expected revenue, as management focused on driving higher returns in a period of weaker Mexican consumer demand (and a strengthening Mexican peso).</li><li>Further, management remains highly focused on improving overall economic health for the company, reducing net debt and maintaining the current dividend rate.</li><li>That said, with the Mexican consumer remaining sluggish in spending on basics and household goods, management lowered 4Q25 top and EBITDA YoY growth to 1% to 5%.</li></ul>

We are reiterating our Buy rating and $22.50 price target and reducing our 4Q25 and 2026 projections for Betterware de Mexico after the company announced 3Q results which registered strong margin growth and weaker than expected revenue, as management focused on driving higher returns in a period of weaker Mexican consumer demand (and a strengthening Mexican peso).Further, management remains highly focused on improving overall economic health for the company, reducing net debt and maintaining the current dividend rate.That said, with the Mexican consumer remaining sluggish in spending on basics and household goods, management lowered 4Q25 top and EBITDA YoY growth to 1% to 5%.

BWMX: 3Q Review: Leveraging Margin Opportunities; Reiterate Buy, $22.50 PT

<ul><li>We are reiterating our Buy rating and $22.50 price target for Betterware de Mexico, slightly tweaking our 3Q25 projection and updating our USD projections for actual 3Q FX rates with the company announcing results after the close Thursday.</li><li>We believe Betterware remains highly focused on overall returns for the namesake division, while JAFRA remains in a full market share expansion mode.</li><li>As such, we believe management will remain upbeat on prospects for 2025 and beyond and the potential for gains from higher margins (and lower overall inventory levels) to fund further growth (including new country expansion) and continue to reduce overall debt levels.</li></ul>

We are reiterating our Buy rating and $22.50 price target for Betterware de Mexico, slightly tweaking our 3Q25 projection and updating our USD projections for actual 3Q FX rates with the company announcing results after the close Thursday.We believe Betterware remains highly focused on overall returns for the namesake division, while JAFRA remains in a full market share expansion mode.As such, we believe management will remain upbeat on prospects for 2025 and beyond and the potential for gains from higher margins (and lower overall inventory levels) to fund further growth (including new country expansion) and continue to reduce overall debt levels.

BWMX: 3Q Preview: Focused on Higher Returns; Reiterate Buy, $22.50 PT

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul>
<li>Valuations for direct selling stocks remain at or near historical lows following a very difficult year for the group in 2023.</li>
<li>The 12-month prospective relative P/E ratio for our proprietary Direct Selling Index closed 2023 at a 43% discount to the market, having entered the year at a 35% discount to the market.</li>
<li>This relative multiple contraction was despite a slight improvement in the prospective absolute P/E ratio to 11.2x at the end of 2023, up from 10.9x at the beginning of the year, since the multiple expansion for the S&amp;P 500 was much greater, having expanded nearly 3 full multiple points on the year to close out at approximately 19.7x forward earnings.</li>
</ul>


Valuations for direct selling stocks remain at or near historical lows following a very difficult year for the group in 2023.
The 12-month prospective relative P/E ratio for our proprietary Direct Selling Index closed 2023 at a 43% discount to the market, having entered the year at a 35% discount to the market.
This relative multiple contraction was despite a slight improvement in the prospective absolute P/E ratio to 11.2x at the end of 2023, up from 10.9x at the beginning of the year, since the multiple expansion for the S&amp;P 500 was much greater, having expanded nearly 3 full multiple points on the year to close out at approximately 19.7x forward earnings.


Direct Sellers Valuation Update - Relative Valuations Remain at Generational Lows

Mexico

Betterware de Mexico SAB de CV sells household products. The Company offers furniture, sink, electronics, utensils, laundry equipment, cleaners, bath accessories, personal care, and other goods. Betterware de Mexico serves customers in Mexico.

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Betterware de Mexico Sab de CV (BWMX US)

BWMX: Snapping the Catalog: Remaining Focused on Returns; Reiterate Buy, PT

We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico after reviewing the December catalog. With the...

Small Cap Consumer Research

BWMX: Snapping the Catalog: Holiday Cheer, Delivered with Higher Returns

We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico after reviewing the November catalog. November...

Small Cap Consumer Research

BWMX: 3Q Review: Leveraging Margin Opportunities; Reiterate Buy, $22.50 PT

We are reiterating our Buy rating and $22.50 price target and reducing our 4Q25 and 2026 projections for Betterware de Mexico after the company...

Small Cap Consumer Research

BWMX: 3Q Preview: Focused on Higher Returns; Reiterate Buy, $22.50 PT

We are reiterating our Buy rating and $22.50 price target for Betterware de Mexico, slightly tweaking our 3Q25 projection and updating our USD...

Small Cap Consumer Research

Direct Sellers Valuation Update - Relative Valuations Remain at Generational Lows

The 12-month prospective relative P/E ratio for our proprietary Direct Selling Index closed 2023 at a 43% discount to the market, having entered...

Water Tower Research

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