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Key Takeaways From A Prominent Bullish Thesis On SodaStream
- Prominent investor Whitney Tilson continues to float around a bullish thesis on SodaStream.
- The thesis remains that the solid Western Europe business and CO2 refill process provides for a strong foundation.
- Tilson provided a $40 target price with a wild card for more upside if the U.S. rebounds or the company reduces sales and marketing expenses.
- New investors can use $20 as a stop loss point on any bet on the turnaround in the stock.
Contradictions And Misnomers Discovered In SodaStream Presentation
- Whitney Tilson's SodaStream thesis bears further evaluation.
- Consistent contradictions leave investors with greater scrutiny of his investment thesis.
- SodaStream's future will have less to do with appliances and more to do with beverage delivery.
- The product has limited appeal. It does not solve a problem. It's a novelty.
- The advantages are not as compelling as one would like to believe.
- US consumers have clearly lost interest.
- Wait for a bounce, then consider shorting. Traders can also go long for a quick swing trade.
- SodaStream reminds me of Netflix and Deckers at their lows.
- SodaStream offers a compelling advantage to customers.
- It's not a fad - customers love their SodaStreams. Rather, the company has executed poorly in the U.S.
- My price target is $40, equal to 20x run-rate earnings for Western Europe or 6.2x the after-tax gross profit of the refill business.
- Estimates continue to fall after Q3 report.
- Rebound chances decline as we approach Keurig Cold launch.
- Short squeeze thesis has mostly collapsed.
- Company transformation needs to work.
- Valuation depressed if you believe in the company's future.
- At-home beverage machine manufacturer SodaStream has struggled to find profit growth in FY2014, hurt by sales volume declines that have unsurprisingly led to more discounting activity.
- The company's relatively poor financial performance has helped to produce a sharp sell-off for its stock price in 2014.
- With management expecting little improvement in the near future, there seems to be little momentum to support a higher market valuation and investors should probably avoid the story.
SodaStream Holiday 2014 Inventories Cap Year-End Performance
- SodaStream retailer inventories have declined by as much as 33% YOY.
- Television commercial advertising returns are limited due to inventory levels not being able to meet incremental increases in demand.
- Poor social media implementations have delivered meaningless returns in the past as customer engagement has been found waning.
SodaStream Launches Pepsi Brand SodaCaps For Limited Test Run
- Small test program partnership indicates underlying research and development initiatives at play.
- Cost per unit analysis and dissection for Pepsi SodaCaps.
- Logistics will play a big role in any partnership.
Whitney Tilson's Kase Capital Boosts Stake In Struggling SodaStream: Opportunity?
- Tilson believes it is a mistake to view SodaStream as a fad.
- He cites strong and growing user base overseas, positive survey reviews, only 1-2% market penetration in the US and high short interest.
- The problems at SodaStream are fixable and Tilson believes the growth deceleration will be temporary.
- U.S. market impacted by decision to focus on gross margins and profitability.
- France distributor still working off excess machine inventory.
- Growth plans take form.
- SODA prices have been in a freefall YTD, profits have plummeted, and overall global sales have noticeably declined.
- SODA will also close its Maaleh Adumim plant in the Israeli-occupied West Bank by June 2015 due largely to a negative public image.
- Despite current woes, SODA has a strong foundation—having beat estimates for both revenues and earnings for nearly all sixteen reported quarters since 2011.
- While we are encouraged by SODA’s historical strength, we suggest investors steer clear of the stock until the future of the industry is more promising.
- Sodastream is a new invention of an old business.
- The company has been bought and sold many times - good brand managers have failed to make it work.
- Latest results are poor, and prices have tumbled.
- What is going on?
- Management has a plan – am I a believer?
Update: SodaStream's Earnings Report Looks Like A Dying Fad
- SODA reported fiscal third quarter results.
- The report increases my confidence that SODA’s product line is a dying fad.
- I anticipated and still anticipate further weakening results.
SodaStream's Decision To Close West Bank Factory A Real Game-Changer
- SODA will relocate its West Bank factory to the Negev, inside Israel itself.
- SODA has faced repeated boycott calls over a factory in occupied territory.
- Consolidating facilities will also reduce costs, important while SODA tries to get growth going again.
SodaStream Outlines Its Potential Return To Growth For Investors
- New plans for growth? Not really given their historical goals and activities.
- Low comps, currency tailwinds and greater manufacturing capabilities will likely serve the company well in 2015.
- Superficial rebranding initiatives don't fit the current problem regarding consumer engagement and purchase conviction.
SodaStream In Q3: Still Flat Or Finally Carbonated?
- SODA seems to be in free-fall financially.
- Company's quarterly expectations are disheartening.
- Lack of strategic partnership opportunities for the company paint a rather bleak outlook for SODA.
Is The Pepsico And SodaStream Partnership A Game Changer For SodaStream?
- Pepsico limited partnership with SodaStream can likely not produce unlimited results initially.
- CO2 remains the highly coveted commodity.
- SodaStream focuses on eliminating soda maker models by year-end in many markets.
- The poor performance of the U.S. segment has brought the stock price down to its all time lows.
- SodaStream has been unable to attract new consumers to its products, which has resulted in a declining U.S. segment.
- Health and Wellness benefits will certainly push the sales higher from the U.S. segment as we believe it can be a competitive advantage for SodaStream.
- Growth in other regions remains strong for the company.
- SodaStream is a likely take-out candidate, but thus far, no firm has been willing to take a stab at shares.
- The firm's fundamentals have started to wane, and its most recent quarter spoke of troubles.
- Let's examine what the firm's shares are worth in this article.
- SodaStream’s US sales are in a tailspin.
- SodaStream’s strategy to recover is health & wellness focus.
- There is no evidence that health & wellness lines is helping competitors in any big way yet, other than in niche products. It will not be SodaStream’s saving grace.
Thu, Dec. 11, 1:50 PM
- SodaStream (SODA +3.9%) trades higher on heavy volume amid more market chatter about a PepsiCo buyout.
- A little bit more on the fundamental side, a note from Capital Ladder Advisory Group indicates that Wal-Mart and Bed Bath & Beyond have asked for replenishments after testing Pepsi brand SodaCaps for SodaStream machines in the Tampa area.
- SodaStream says testing of the initiative has gone well, while PepsiCo indicates it won't comment on an active consumer test.
Wed, Dec. 10, 11:13 AM
- SodaStream (SODA +0.2%) is initiated by Rhino Trading Partners with a Buy rating.
- The boutique trading firm has a $28 price target on shares on its view SodaStream's growth potential justifies a higher multiple.
- Shares of SodaStream still sit near their 52-week lows, but haven't dipped below the $20 mark.
Wed, Dec. 3, 12:51 PM
- "SodaStream (NASDAQ:SODA) reminds me of Netflix and Deckers at their lows," declares Whitney Tilson, reiterating his bullish stance (previous) on the home soda machine maker in a new presentation.
- Though Tilson admits his long position hasn't fared well to date - "I thought it was cheap at $40 – and I think it’s really cheap around $20!" - he attributes the company's recent woes to poor U.S. execution, and asserts numerous surveys point to strong customer satisfaction.
- Tilson's own U.S. survey (yielded 393 responses) found 55% are "hardcore users" of Sodastream's machines, and that 81% would recommend one to a friend.
- He dismisses rivals as "vaporware (Keurig Cold) or barely detectible (Bevyz)," and argues Sodastram's CO2 refill business is alone worth more than its current market cap. Tilson's $40 target is "equal to 20x run-rate earnings for Western Europe or 6.2x the after-tax gross profit of the refill business."
- Shares have spiked in response to Tilson's presentation.
Tue, Nov. 11, 2:02 PM
- SodaStream (SODA -0.2%) says its marketing campaigns for the rest of this year and in 2015 will focus on water.
- The company's shift in strategy away from soda was highlighted during its earnings day presentation last month.
- "At SodaStream, we make water exciting," promises one SodaStream exec.
- Shares of SodaStream are down 56.3% YTD as demand outside of Europe has disappointed for the most part.
Wed, Oct. 29, 11:48 AM
- SodaStream (SODA -2.5%) releases a fresh growth plan as part of its earnings day disclosures.
- The company says that after reaching an inflection point where operational complexity has eroded margins a shift in strategy will be implemented.
- SodaSteam (H2OStream?) plans to position itself as a health and wellness solution and focus on sparkling water products.
- The company also says it will relocate its Alon ATvor and Mishor Adumim facilities by late 2015.
- The consolidation of manufacturing is expected to drive gross margin improvement of 200 bps in 2016.
- SodaStream Growth plan (.pdf)
Wed, Oct. 29, 7:42 AM
- SodaStream (NASDAQ:SODA) cites a challenging selling condition in the U.S. and a mixed performance globally in its report on Q3 results.
- The company says sales of soda maker kits fell off 215 to $62.5M, while consumables sales rose 2.1% to $79.1M.
- Geographic revenue breakdown: The Americas -20.3% to $49.8M, Western Europe -0.9% to $75.5M, Asia-Pacific +4.7% to $8.6M, Central & Eastern Europe/Middle East/Africa -2.2% to $10.7M.
- Gross margin rate -290 bps to 51.2%.
- Operating margin -540 bps to 7.1%.
- Sales and marketing expense rate +20 bps to 33.1%.
- Guidance: SodaStream expects 2014 revenue of $562.7M.
- SODA -1.6% premarket.
Wed, Oct. 29, 7:40 AM
Tue, Oct. 28, 5:30 PM
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Fri, Oct. 24, 11:57 AM| 6 Comments
Fri, Oct. 24, 11:42 AM
Wed, Oct. 8, 12:16 PM
- SodaStream (SODA -3.5%) falls off again to follow up on yesterday's shellacking.
- Investors are fretting over the 1% penetration rate that SodaStream has in the U.S. which compares poorly to the +20% rates in some western European nations.
- There's also an unconfirmed report out that retail chain Crate & Barrel plans to discontinue selling the company's products.
Tue, Oct. 7, 12:45 PM
Tue, Oct. 7, 8:37 AM
- Shares of Keurig Green Mountain (NASDAQ:GMCR) are higher in early action despite a soft read from SodaStream (NASDAQ:SODA) on demand for home beverage systems.
- A strong initiation from Goldman Sachs on the stock is helping to offset any concerns on the category.
- Coca-Cola (NYSE:KO) has its eyes on the developments with its 10-year Keurig Cold partnership kicking off in 2015.
- If it's true that PepsiCo (NYSE:PEP) and Starbucks (NASDAQ:SBUX) have interest in SodaStream - there's some number-crunching going inside the C-suites there.
- GMCR +2.1% premarket, SODA -17.5%.
Tue, Oct. 7, 8:13 AM
- Shares of SodaStream (NASDAQ:SODA) come off their trading halt to show a double-digit loss following a stark warning from the company on Q3.
- Grounded beverage industry analysts have been noting for a while that SodaStream's soft sales in the U.S. is the bigger story than takeover chatter.
- SODA -15.9% premarket
Tue, Oct. 7, 7:36 AM
- SodaStream (NASDAQ:SODA) says it's "very disappointed" in its preliminary view of Q3 results.
- Revenue is expected to be $125M vs. $154M consensus.
- The company's estimate for $8.5M in operating income for the quarter is also below estimates.
- The key pullout for SodaStream's release: "We have not succeeded in attracting new consumers to our home carbonation system at the rate we believe should be achieved."
- Shares of SODA have been halted for trading by the Nasdaq.
Wed, Sep. 24, 1:13 PM
- NPD Group reports the U.S. small home appliance saw sales rise 4% to $19.6B for the year ending June 2014.
- Perhaps a surprise, growth in the rice cooker and electric kettles categories were stronger than what was seen for single-serve brewing systems and countertop blenders.
- Related stocks: GMCR, SBUX, WHR, CONN, HGG, HD, NC, SWK, SODA,
SODA vs. ETF Alternatives
SodaStream International Ltd along with its subsidiaries is engaged in developing, manufacturing & marketing beverage carbonation systems & related products. It enables consumers to transform tap water into carbonated soft drinks & sparkling water.
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