continues to offer investors growth, but the stock has lost its
fizz in recent sessions.
ChartWatch wrote about the
stock in January
after the shares eclipsed a resistance level at $45 (blue line).
SODA had been trapped under $45 for about 17 months. Then the
shares blasted through this level on better-than-average volume
in January. Such a breakout was an indication that investors were
more bullish than usual about the stock ahead of a February
This chart shows the price of
shares along with an important support level to
However, the company did not report the strong financials
investors were hoping to see. Curiously, SODA reported numbers
that beat Wall Street's fourth-quarter EPS and sales view.
Moreover, the outlook also exceeded expectations. Yet the shares
dipped 7% early after the report.
There may have been some concern with the gross margin. The
company reported gross margin of 54%, which was slightly below
expectations. Also, refill unit sales were flat. SODA makes most
of its money from consumables. So the flat refill sales may have
been of concern to investors. Flat consumable sales could
indicate that people are buying the machines, but not using them
enough. On the bright side, machine sales eclipsed 3.5 million
and the company reported one million sales in the fourth quarter
Let's not forget that the company posted record sales and
earnings in 2012. Revenue increased 51% to $436 million and
earnings increased 60% to $43.9 million. Analysts expect SODA to
report $522 million in revenue and a $2.78 EPS this year, leaving
the shares with a P/E ratio of 17.
Not only does the stock appear cheap, it's also at an important
support level. The shares have fallen back to the previously
mentioned breakout zone at $45. Typically, old resistance will
become new support. Additionally, the rising 50-day moving
average is at $47.61 (orange line). Stocks are considered to be
in an uptrend when trading above their respective 50-day moving
averages. That trend is stronger when the 50-day is rising, which
is the case for SODA.
Equities mentioned in this article: SODA
Positions held in companies mentioned above: