SodaStream International Ltd.
) has topped earnings estimates for 8 straight quarters, and is
expected to report another solid performance late next month. Given
solid fundamentals, innovative products and a potential long-term
earnings growth rate of 30.4%, this Zacks #1 Rank (Strong Buy)
manufacturer of soda making systems turns out to be a solid
Strong Upcoming Year Expected
SodaStream, which is scheduled to report its fourth quarter and
full year 2012 results on Feb 28, raised its guidance after
reporting solid third quarter results in November. It is confident
of reporting strong results in the quarter as well.
For 2012, SodaStream expects revenue growth of 46%, up from the
prior expectation for an increase of 40%. Net income is expected to
increase 59% year over year, compared to the earlier guidance for
growth of 55%.
The Zacks Consensus Estimate for the fourth quarter stands at 38
cents per share, up 44.5% from the prior year quarter. For 2012,
the Zacks Consensus Estimate is $2.11 per share, up 57.3% from the
We believe the stock will be driven forward by solid demand,
strategic partnerships like that with Kraft Foods Group, Inc. (
), enhanced marketing techniques, product innovations, accretive
acquisitions and successful strategic investments.
Solid Third Quarter Results
On Nov 7, the company reported solid third quarter 2012 earnings of
80 cents per share, which beat the Zacks Consensus Estimate by
17.7% and last year's result by 66.7%.
Revenue of $112.5 million increased 48.7% year over year on the
back of strong performances in both of the product categories (soda
makers and consumables) and in all four geographic regions. Total
revenue also beat the Zacks Consensus Estimate of $102 million.
Gross margins improved 70 basis points (bps) while operating margin
improved 160 bps year over year.
Earnings Estimates Improving
Over the past 60 days, the Zacks Consensus Estimate for 2012 has
advanced 0.5% to $2.11 per share, reflecting a year-over-year
growth rate of 57.3%. The Zacks Consensus Estimate for 2013 is up
1.5% to $2.67 per share over the same timeframe, reflecting
year-over-year growth of 26.9%.
SodaStream currently trades at a forward P/E of 18.4, a premium of
75% to the peer group average of 10.5. However, the stock appears
reasonably priced with a trailing 12-month return on equity (ROE)
of 18.1%, which is above the peer group average of 10.6%. The PEG
ratio also comes in at 0.60, a 40% discount to the benchmark of 1
for a fairly priced stock.
Shares of SodaStream have been rising consistently since
mid-November and reached a 52-week high of $49.98 on Jan 7, 2013.
Moreover, the stock is currently trading above its 50- and 200-day
moving averages, which stand at $40.88 and $37.67, respectively. In
fact, the stock has been consistently trading above its 50-day and
200-day moving averages since late-Nov 2012. Volume averages
roughly 1,002K daily.
Based in Israel, SodaStream commands a global leadership position
in the home beverage carbonation market. The soda making systems
manufactured by the company enables consumers to easily transform
ordinary tap water into carbonated soft drinks and sparkling water
instantly. SodaStream's products are sold mainly under the
SodaStream brand name at many leading retail stores.
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