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The Perpetually Misunderstood SodaStream

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The sky appears to be the limit for SodaStream (NASDAQ: SODA  ) , but investors would never know that based on the market average multiples applied to the stock. While SodaStream provides fast growth and unlimited potential, the stock trades at pedestrian multiples, including less than 19 times its 2013 earnings estimates and 13 times its adjusted EBITDA forecasts. Remember that beverage industry giant Coca-Cola  (NYSE: KO  ) trades at 20 times its earnings, and related home beverage market participant Green Mountain Coffee Roasters (NASDAQ: GMCR  )  trades at 21 times its fiscal year 2013 earnings.

SodaStream remains the unquestioned leader in home beverage carbonation systems, yet the market tends to stress on the smallest of details. In the last quarter, it was the lackluster reported flavor sales growth of only 7%. Remember that Coca-Cola would be happy with even 7% growth considering the expectation of a 2% sales decline this year. Investors should review the details of the earnings call and they might not be so quick to dump an innovative leader in the burgeoning home carbonation market based on that number. It was clear that logical reasons exist for a lackluster number, ensuring that SodaStream's growth plans remain intact.

Read the full article here.


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




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