Jones Soda's Promise is Fizzling Out - Barron's

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The Glass Is Half-Empty by Christopher C. Williams

Summary: Jones Soda's (JSDA) expensive, funky sodas excite investors who've bubbled shares up 256% since August on frothy earnings expectations and takeover rumors. But shares trade at 170 times 2006 earnings ($0.13/share), and 120x 2007's $0.17 EPS, while rivals Hansen Natural (HANS) and giants Coca Cola (KO) and PepsiCo (PEP) trade at mid-teen P/Es. Even a wide 20 P/E for JSDA would denote $7 shares, to the current $21.24. At a 13x sales share price vs. an industry average of 2.5x sales common for takeovers, Jones is too expensive. CEO Peter Van Stolk and other Jones execs are offloading shares as did large stakeholders like Bjurman Barry Small Cap Growth Fund-- citing extravagant multiples, flat Q1 sales and boring sales growth. Short-sellers own 20% of outstanding shares. Initiatives with WalMart (WMT) and a concentrate deal with distributor National Beverages could supply 27% of 2007's estimated $58m revenues, and Jones' (as yet unproven) "healthier soda," launched Memorial weekend with sugar cane-based drinks, might contribute towards $5m in profits on 2007 revenues, and $9m on $74m revenues in 2008, but PepsiCo's reportedly brewing up sugar cane too, and a former Glass Lewis analyst says it's all largely priced in already anyway. Barron's Bottom Line: Even above industry averages, shares should be 65% lower.

JSDA 1-yr. chart:

Related Links: Jones Soda Tanks On Earnings Miss; Looking For a Bounce • Jones Soda: The New Prodigy in Town • Jones Soda: Irrational Exuberance Waning

Comments

[stacked up:]

Excellent reporting on another Jim Cramer hyped stock..
JSDA is preposterously priced solely because Cramer touted this "thing" ad nauseum on his CNBC show devoted to the "Burning Match Theory" .
While a "nation of sheep" type investors rush out and buy every piece of garbage Cramer promotes, the SEC sits idly by and this "snake oil salesman" cleans up !!
Ah well, I am not my brother's keeper ..
I do my investing homework as best as I can.
I am grateful for the expert reportage always in Barron's, and congrats to Alpha on your superb site as well.
Gary Gruen

2007 May 28 03:25 PM

[mlinkous397:]

You know where the off button is on your TV or the channel changer?

2007 May 29 03:23 AM

[Cabgi225:]

It was some time ago amid the hype over JSDA that I went around to several convenient stores, gas stations etc. and asked the clerks about Jones Soda. Nobody buys it. Period. Stock on hand had dust on it.

2007 May 28 09:27 PM