Hansen Natural Corp getting Trashed POST (DPS) Distribution
Ever since Hansen Natural Corp has abandoned their distribution with Dr. Pepper Snapple Group, they had to pay a settlement fee to Dr. Pepper Snapple Group and are facing great trouble with their new distribution deal with Coca Cola Company.
A lot of Motley Fool All Stars have piled on this stock with Underperform ratings dragging the once 4-5 Star Performer to 3 stars.
Well, this All Star doesn't believe in GLOATING over his choice of investing in DPS instead of HANS.....But only if I was running for President of the United States. Since I am not running for President of the United States... Let the Gloating Commence!
Currently HANSEN Natural Corp trades just single digits ahead of (DPS).
What is interesting is despite the already sensational sell-off spree of Hansen's stock and total meltdown of the company's market cap, the P/E Ratio is still just over 25. A 25 multiple for any beverage company is a very, very, high multiple....This tells me this one has further to fall.
But, I am still outperforming Hansen Natural Corp. because a lot of the issues plauging the company's sales of their energy drink has more to do with failure to re-stock inventories as fast as they did under (DPS).
I don't know why Hansen Natural Corp. had to dump (DPS) for North American distribution. Maybe there's something in the contract that forbid them to have multiple distributors? If not, then I don't see why HANS would just do a multiple distrbutor deal in which Coca Cola gets the international distribution of the Energy Drink and DPS keeps their deal intact in North America.
That would have prevented this massive stock price melt-down and earnings melt-down experienced by the company starting in the 1st 2 weeks of MAY.
Alas.... These travails tend to occur when a company gets engaged with a new distributor.
Take Activision Blizzard as another example to prove my point (ATVI). Blizzard Enetertainment has run into some trouble trying to switch out of The9 Limited to NetEase for their WOW in CHINA. The9 Limited originally didn't want to preserve user accounts during the switch as they were upset over contractual issues.
The issues since been resolved in a settlement agreement though.... But it sure looked nasty in the beginning.
That's how I view (HANS)... It's called *Growing Pains* and certainly not a situation in which one should be bailing out of their stake in HANS.