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Bull of the Day: SodaStream (SODA)

Tracey Ryniec
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SodaStream International Limited (SODA) has found its niche as health and wellness trends have boosted sales of its sparkling water system. This Zacks Rank #1 (Strong Buy) is expected to grow revenue by the double digits in 2018.

SodaStream makes and distributes home beverage carbonation systems called Sparkling Water Makers. These allow consumers to turn tap water into sparkling water and flavored sparkling water. Products are available at more than 80,000 retail stores in 45 countries.

Another Big Beat in the Fourth Quarter

On Feb 14, SodaStream reported fourth quarter results and crushed the Zacks Consensus Estimate by 45%. The company reported $1.13 versus the consensus of $0.78.

It was the 10th earnings beat in a row as the company has turned around the business.

The holiday quarter was strong with revenue jumping 19.6% to $157.7 million from $131.8 million a year ago.

The hottest markets were Germany, Canada, Australia and the US.

Operating income rose 36% to $25.7 million, an all-time record.

For the year, revenue rose 14.1% to $543.4 million from $476.1 million in 2016.

It's plan to expand household penetration and increase usage of the home carbonation system has been working.  

SodaStream has been generating a nice cash flow. As of Dec 31, 2017, the company had cash and investments of $155.2 million, up from $57.3 million at the end of December 2016.

Bullish Guidance for 2018

SodaStream gave bullish guidance for 2018 with revenue expected to rise another 12%.

Earnings guidance is forecast to be 5% higher than 2017 or $3.29.

However, the analysts estimates are already above the company's guidance.

2 estimates have risen in the last 60 days to $3.42 from $3.24.

2019 estimates have also been on the move higher with two rising in the last 2 months. That pushed up the 2019 Zacks Consensus Estimate to $3.93 from $3.44.

Fizzi One Touch Coming This Summer

On Mar 12, SodaStream announced it would release its newest automatic sparkling water maker, the Fizzi One Touch, in the United States this summer.

The system will be available as of June 2018 on sodastreamusa.com in either piano black or pure white.

It will be available in retail locations in September 2018.

Shares Continue to Soar

It's been a wild 2-year ride for shareholders as the stock bounced off the lows and then went on a tear.

Over the last 2 years, they've risen 566%.

But even if you got in late to this rally, such as to start 2018, you'd be up 34%.

However, if you're looking for a cheap stock, you'll have to look elsewhere. SodaStream is trading with a forward P/E of 27.5.

But for investors looking for a way to get into the wellness boom, SodaStream is one to keep on your short list.

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