When the price crashes to greatly oversold because of a panic reaction, it might be a good time to buy back shares.
I've been opposed to such an action in the past, but now the opportunity for the company might be too good to pass up. I believe the "war discount" is probably as high as $10 or even more. Authorizing a buyback of maybe 500,000 shares makes sense.
The cash position of the company is good and I believe this would be affordable without affecting the company's ability to function.
Such an action would send a clear message to the investing public and would be beneficial to all shareholders at this point in time.
I see. Based on that number it will only represent a 15% growth rate which I doubt will be offered as guidance for 2013. The company does guide modestly as they did for 2012 originally to be 29% higher. We are modeling guidance and a growth rate of 25-30% in 2013 earnings. I would tend to believe if the company suggests something less it would not be received favorably taking into account the markets it has outlined for expansion next year.
The other trick with SODA is to make certain that one is comparing apples to apples. SODA puts out nonGAAP as well as GAAP info and estimates are more along the lines of nonGAAP, carving out stock based comp, etc. I don't think your 25-30% is unreasonable. I think SODA is smart to wait until holiday 2012 season is over to publish 2013 guidance so that they understand/estimate how many units are going to order flavors/CO2.
Sentiment: Strong Buy
You people are so out of touch with reality it is scarey. Buy back shares? Only a total fool would even fathom that thought with a company that is generating less that 500 mill in revenues and sitting on a poultry 50 mil in cash. That is even if you believe their balance sheet and income statement. Only a idiot believes that GAAP standards are accurate, specially for a foreign company. Minus 10% off the top for starters and that is a gift. . You must understand something. SODA is in business to make money for themselves. Shareholders are second base at best. The guys at the top would love nothing more to sell out this company and walk away with their millions. If they could, they would and so would you.
I would personally rather see SODA build its cash balances. I believe that SODA is about to hit an inflection point where it begins to generate significant cash flow. The fad thesis is simply wrong, the increasing sale of higher margin flavors is resulting in increasing gross margins, the Campbell's/V8 deal is simply going to drive increased usage and eventually this stock is going to get someone's attention in 2013. At this point, SODA is a compelling buy for me. 2013 eps of $2.75 at the current 17 PE would put the stock at $46.75 which is a 39% return from Friday's close. Of course this assume no multiple expansion for this rapid grower.
Sentiment: Strong Buy
"Eventually" is a word we have seen on these boards dozens of times over the last two years. Simply put, waiting for eventually is allowing events to work on you as opposed to making events that are best for the shareholders.
SODA has over $30 million in cash and no debt. They are generating good cash flow now and reducing their cash equivalents by $15 million, IMO, would do no harm and would be plenty helpful. At some point down the road SODA may want to raise additional cash. How silly not to buy back shares on the cheap and sell that back later at a premium.
As long as planned expansion can take place without the cash used for the buyback this could only be a plus.
Suppose that the problem becomes that SODA's growth is so amazing they need the cash. At such a point SODA could either borrow or at that point the share price should be so great they can resell what they purchase at higher prices.
Something needs to be done ASAP. Remember that there is long term damage already to SODA stock price because it has remained so low in price. Cramer's bear rating is a symptom of that damage. His position on the stock is related to price movement, not fundamentals.
The companies goal needs to be increasing share value for the long term. Leaving that share pricing to the market manipulators needs to be addressed.
"The cash position of the company is good and I believe this would be affordable without affecting the company's ability to function."
What I really mean in that statement is that the company's growth rate would not suffer with such a buyback. This really amounts to using about one quarter's profit, about $17 million.