Premium branded spirits company Castle Brands Inc.’s ROX earnings broke even in the fourth quarter of fiscal 2017, in line with the Zacks Consensus Estimate as well as with the year-ago figure.
Solid growth of the company’s more profitable brands, Jefferson's, Goslings and Irish whiskeys, resulted in both strong revenue growth and higher gross profits.
In fiscal 2017, the company reported loss per share of 1 cent compared with the year-ago loss of 2 cents.
Castle Brands, Inc. Price, Consensus and EPS Surprise
Castle Brands, Inc. Price, Consensus and EPS Surprise | Castle Brands, Inc. Quote
Revenues & EBITDA
The company’s quarterly revenues of $22.6 million surpassed the Zacks Consensus Estimate of $21 million by 7.6%. Revenues also improved 13.1% year over year.
For fiscal 2017, Castle Brands had net sales of $77.3 million, reflecting an increase of 7% year over year. This was driven by solid improvement in Jefferson's bourbons and Goslings Stormy Ginger Beer.
Sales of Goslings Stormy Ginger Beer increased 23.3% in the year, backed by strong sales in the U.S. and international markets. In March, Goslings Stormy Ginger Beer was added to the mixer section in approximately 4,500 Walmart stores in the U.S.
Adjusted EBITDA in the fourth quarter of fiscal 2017 jumped 50% year over year to $2.1 million. It also improved 44.4% to $5.2 million in fiscal 2017 from the fiscal 2016 level.
On March, Castle Brands made a strategic investment for an additional 20.1% stake in its affiliate Gosling-Castle Partners Inc. or GCP. Castle Brands now has beefed up its ownership in GCP to 80.1% and extended the terms of the agreement through Mar 2030 with 10-year renewal terms from then on.
Sales of Goslings Rum and Beer have increased in the U.S. and internationally since the formation of GCP in 2005. Now, with the increase in ownership, Castle Brands’ strong sales and marketing initiatives are expected to boost Goslings Rum and Beer sales. This would help expand Castle Brands consumer base, thus enhancing profitability.
As of Mar 31, 2017, the company has cash and cash equivalents of $0.61 million compared with $1.43 million as of Mar 31, 2016. Total debt was $34.9 million at the end of fiscal 2017 compared with $13.9 million in fiscal 2016.
Stock Price Movement
Shares of Castle Brands have soared 126.3% on a year-to-date basis, outperforming the 10% growth of the Zacks categorized Beverages - Alcohol industry.
Zacks Rank & Peer Release
Castle Brands has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks in the industry include Craft Brew Alliance, Inc. BREW, Constellation Brands Inc. STZ and Davide Campari Milano SpA DVDCY.
Craft Brew, a Zacks Rank #1 company, is expected to witness 150% growth in its earnings this year.
Constellation Brands, a Zacks Rank #2 (Buy) company, has an expected revenue growth rate of 18.2% for the current year on 4.3% revenue growth.
Another Zacks Rank #2 stock, Davide Campari Milano, has a Momentum style score of “A”.
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