Sodastream (SODA) has attracted its share of short sellers (approximately 40% of outstanding shares) betting it is the next Green Mountain Coffee Roasters (GMCR). The shorts are likely to take a lot of pain today as the company just published its quarterly results which blew away estimates. After taking a look at the stock it looks like an enticing growth play at these levels.
Key earning highlights from SODA:
- Earnings came in at 87 cents a share, an impressive 32 cents above consensus estimates.
- Revenues came in at a little over $112mm, some 8% over projections.
- Sales were up a very solid 61% Y/Y in North America and gross margins improved 70bps to 54.2%.
- The company also upped its full 2012 revenue guidance to $298mm, 46% above 2011's total.
- SodaStream International manufactures and markets home beverage carbonation systems that enable consumers to transform ordinary tap water instantly into carbonated soft drinks and sparkling water
4 additional reasons SODA is a good growth play at $35 a share:
- Earnings are marching up smartly. The company made $1.60 a share in FY2011 and is on track on for $2.25 a share for FY2012. Analysts currently expect over $2.80 in EPS for FY2013 (look for this being revised up in the coming weeks on the back of this earnings report).
- The six analysts that cover the stock have a median price target of $49 a share on the stock (also look for this to be revised up), 40% above the current stock price.
- The company has a solid balance sheet with over $55mm in net cash on the balance sheet and sells for just 12x forward earnings, a deep discount to its five year average (25.9)
- This is the sixth earnings report to easily beat earnings estimates and the stock has a very low five year projected PEG (.51).