IB Net Payout Yields Model

SodaStream Moving To US Currency

SodaStream (SODA) reported Q4'11 earnings this morning that vastly disappointed the market. The numbers were very solid and the guidance was much higher than estimates, but the market tends to hone onto the weakest numbers with SodaStream when valuing the company.

The weakest number in Q4 was the meager 8% soda maker sales increase. Though the company has been clear that a lot of retailers pulled sales into Q3 accounting for the 60% increase last Q, the market just decides to act ignorant and sell the stock hard.

My guess is that a ton of shorts chose to push the 'negative' number hard in order to exit a short position or to cause panic for larger gains. One analyst even went so far as to suggest that soda maker sales were decelerating which is a clear blatant misstatement. Every data point suggests that SodaStream distributors sold out for the holiday period, pulled sales into Q3, and management guided up for 2012. None of these data point suggests a problem down the road.

More importantly and completely ignored by the market is that SodaStream has moved to the US currency effective January 1st. This should help the stock price considerably as it was the only stock in my universe of coverage that analysts report in non-USD. For example, the numbers reported by Yahoo! Finance are in Euros causing the price to earnings ratios to be grossly under reported.

As mentioned the guidance provided by management suggests earnings of $2.11 in '12 and $2.74 in 2012 (assuming 30% growth). At the current price of $41, it trades at a forward PE of 15. Less than half the 5 year expected growth rate of 30%.

Info per the earnings release:

Fourth Quarter Fiscal 2011 Highlights
  • Revenues increased 32% to Euro 66.1 million
  • Americas revenues increased 70% to Euro 24.6 million
  • Adjusted diluted earnings per share was Euro 0.25 or $0.32*
  • Unit sales of soda makers increased 8% to 767,000 (sales pulled into Q3 + numerous sellouts)
  • Unit sales of flavors increased 24% to 4.6 million
  • Unit sales of CO2 refills increased 27% to 3.4 million
  • US retailers sold 430K units versus purchasing 220K 

Full Year 2012 Guidance

The Company expects full year 2012 revenue to increase approximately 28% over 2011 revenue of Euro 222.7 million ($289.0 million per the convenience translation of 1.2973).  On an adjusted basis, excluding the share-based payment expense, 2012 net income is expected to increase approximately 35% over the Adjusted net income of Euro 25.3 million ($32.9 million per the convenience translation of 1.2973) reported in 2011.

Disclosure: Long SODA. Please review the disclaimer page for more details. 


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