SodaStream
(
SODA
) has topped the Zacks Consensus Estimate in each of the last five
quarters and has seen estimates increase. The stock is a Zacks #2
Rank (Buy).
Company Description
SodaStream International Ltd. engages in the development,
manufacture, and marketing of home beverage carbonation systems and
related products. Its home beverage carbonation systems enable
consumers to transform ordinary tap water into carbonated soft
drinks and sparkling water. The company sells its products under
the SodaStream and Soda-Club brand names through approximately
50,000 retail stores in 42 countries. SodaStream International Ltd.
is headquartered in Airport City, Israel.
Five Straight Positive Earnings Surprises
SODA has topped the Zacks Consensus Estimate in each of the last
five quarters. The largest of the beats came in the December 2010
quarter. The company reported $0.29, $0.18 or 163% more than the
$0.11 estimate.
The next three quarters saw earnings beats that averaged 45% ahead
of estimates. The March 2011 quarter saw a significant move in the
stock following the 55% earnings beat. The stock moved higher by
about 29% following that earnings report.
Stock Moves On Earnings
The last three earnings beats have not translated into big gains
for shareholders. The stock traded lower by 30% following the June
2011 earnings report despite the fact the company beat estimates by
29%. A 50% beat in the September 2011 quarter also saw the stock
move lower by 3.5%.
Most Recent Beat
The company reported is December 2011 quarter late in February and
posted revenue of $86 million, up from $66 million in the year ago
period. Earnings per share of $0.26 were 4% ahead of the Zacks
Consensus Estimate but down from $0.29 in the same quarter last
year.
Estimates Increase
SODA is seeing analysts increase estimates. In January 2012, the
Zacks Consensus Estimate for 2012 was $1.81 and has since moved to
$1.93. The 2013 estimate moved from $2.38 in January 2012 to the
current level of $2.54. That implies earnings growth of 31% for
2013.
Valuation
The valuation for SODA is fairly interesting. A trailing twelve
month PE of 25x is a healthy premium to the industry average of
14x. The forward PE of 18x is much more palatable and closer to the
industry average of 12.7x. Price to book shows a mild premium while
price to sales of 2.35x shows a discount to the 2.43 industry
average. What aggressive growth investors will key on is the
revenue growth of 35% for the fiscal year that ended in December
versus the 5.7% industry average. Also, EPS growth is projected to
be 44% for SODA compared to the 10% estimate for the industry.
The Chart
Charts can tell a story of their own. The SODA chart, when limited
to the last six months shows a stock that has found support at
around $30 and seen highs of $48. The low $30's price implies
downside risk of around 10% and upside potential of about 50%. When
that chart is backed out to a year, we see that the stock has a
great run followed by an even greater fall in the last year. SODA
is a Zacks #2 Rank (Buy).
Brian Bolan is an Aggressive Growth Stock Strategist for
Zacks.com.
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