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Why National Beverage Stock Lost 18% in February

Demitrios Kalogeropoulos, The Motley Fool

What happened

Shareholders of soda and sparkling-water specialist National Beverage (NASDAQ: FIZZ) trailed the market last month as its stock fell 18% compared to a 3% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline reversed the previous month's gain and left the stock at a new 52-week low.

Sparkling water in a glass with a sliced lime on the rim of the glass.

Image source: Getty Images.

So what

Investors have become more uncertain about the company's prospects lately thanks to a sharp slowdown in sales growth. National Beverage said in early December that revenue gains fell to 7% in the third quarter, in fact, from 13% in the prior quarter. Executives blamed the shortfall on bad press surrounding recent challenges to its national brand image. While they predicted a quick rebound from that hit, shareholders are bracing for a potentially longer-term slump.

Now what

Much of that uncertainty will be resolved when the company posts its fourth-quarter earnings report in mid-March. In that announcement, investors will be watching sales-growth rates for signs that the LaCroix franchise is returning to its prior market-thumping pace.

It will also be interesting to see whether National Beverage was forced to scale back on price increases in Q4 or spend more aggressively on marketing and advertising to counteract the negative brand news. If so, its profitability might be set to decline in 2019.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends National Beverage. The Motley Fool has a disclosure policy.