SodaStream -- Time to Invest?
SodaStream (SODA) is a stock that has received some regular coverage in Fooldom. Steve Symington recently wrote a nice piece about the company (http://www.fool.com/investing/general/2013/12/06/why-i-just-...), whose stock has fallen to $53.33 from a 52 week high of $77.80. SodaStream is valued at $1.1 billion and is making headway with its "home carbonation products" -- products that essentially allow people to make carbonated drinks/sodas in their home.
SodaStream has a unique concept that appears to have gained popularity over the past several years. The company markets its products as "green" -- no longer the need to have soda cans pile up when you can make your own sodas at home -- as well as offering savings for regular soda drinkers. The stock got hit after reporting 3Q 2013 results on October 30, even though the company maintained its guidance of expanding revenue 30% and net income 23% in 2013:
My main concern, just looking at the surface, is SodaStream's struggle to produce positive cash flow this year. Over the past several years the company managed to increase operating cash flow annually, but so far in 2013 SodaStream has produced -$16.73 million in operating cash flow. Operating cash flow did increase the most recent quarter, so perhaps the first two quarters of this year were simply a deviation from the norm.
Still, the financial prospects of SodaStream seem to remain intact despite the most recent quarter. This year the product has seen continued sales particularly in the Americas and in Europe. With a P/E around 22.5, SodaStream shares look to be at appealing levels.
At this point a key question is whether the company's products are a passing fad or a viable long-term market. I lean toward the latter the more I research SodaStream. SodaStream offers a healthier, eco-friendly, and financially efficient product compared to traditional soda cans. Of course, the flavor of SodaStream's "caps" may not yet fully compare to a can of Coke, but the quality and variety of SodaStream favors seem to be improving.
SodaStream is another intriguing company that may be trading at a bargain today. The company's sales over the last few years are impressive, and management remains confident with guidance for this year as well. A lot will hinge on the company's upcoming 4Q 2013 results. The stock has been walloped a good amount over the past 6 weeks, though, which makes it tempting to open a position at current levels. I will dig into SodaStream a bit more as time allows.
Any SODA lovers out there?