Shares of SodaStream International Ltd. SODA scaled a new 52-week high of $41.85 on Jan 12. In fact, after two difficult years, this beverage stock staged a comeback with a 141.9% rise in 2016 and 225% in the last one-year period. The stock also outperformed the Zacks categorized Consumer Products-Miscellaneous Discretionary industry’s 22.2%.
What’s Driving It?
The 2016 performance marks a comeback for this Israel-based manufacturer of home beverage carbonation systems with a market cap of around $874.3 million.
Its sparkling water brand helped revive the company. Through the first nine months of 2016, the company generated profits of $1.35 per share, a 206.8% jump year over year on revenue increase of just 14.7%. This throws light on the company's strong business model and operating leverage, with its ability to control costs.
The growing popularity of sparkling water is driving this rally, as SodaStream’s cost effective beverage carbonation systems help consumers transform ordinary tap water into soft drinks and sparkling water easily. Sparkling water maker unit sales rose 23% to 788,000 in the last reported third quarter.
During the third quarter, the company’s home carbonation system produced more sparkling water than any other brand worldwide, which resulted in a quarterly record of 7.7 million gas refills. SodaStream’s products are primarily sold at major retail stores like Kohl’s, Corp. KSS, Macy’s, Inc. M and Bed Bath & Beyond, Inc. BBBY.
As a result, the company was able to beat analysts’ expectations in each of the last four quarters, resulting in an average positive surprise of a solid 104.19%.
Estimates have also been trending higher. Over the past 60 days, positive revisions have helped raise the consensus estimate by 6.9% for SodaStream to 31 cents per share for the to-be-reported quarter. Estimates have also risen 12.8% for the full year to $1.68 and by 4.7% to $1.79 for the next year. Additionally, estimates for 2016 and 2017 increased 47.4% and 36.6%, respectively, over the past 90 days.
The stock also flaunts a VGM score of “A” and a 3–5 year expected EPS growth rate of 11.25%.
SodaStream carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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