Sodastream International Ltd Is Anything But Bubbly; Where Is It Headed?

Sodastream International Ltd SODA shares were down on Tuesday. The company essentially came out with an admission that its key product initiatives were falling short of expectations, and noted competitive pressures were compounding the problem.

Headlines aside, what does the overall picture look like for Sodastream?

What The Bulls See...

• An enterprise value of over $600 million versus a market capitalization of $456.41 million
• A price-to-book ratio of 1.66
• A price-to-sales ratio of 1.01
• A price-to-earnings ratio of just over 10 versus estimated revenue growth of 8.8 percent and estimated EPS growth of 13 percent
• Net profit margins of 4.91 percent and positive operating cash flows of $27.27 million annually
• A clean balance sheet
• A current ratio of 2.24
• A debt-to-equity ratio of 11.13 percent
• Cash reserves of $36.24 million, nearly keeping up with total debt of $38.62 million

What The Bears See...

• Doubts about the “cheap” valuation metrics, particularly due to the company's admission that its growth initiatives are not meeting expectations
• A brutal stock chart that calls for much lower prices if things don't change in the immediate future

Technical Take

Technicians note that as oversold as Sodastream is, there could easily be even more downside ahead for this stock.

If new all-time lows are made below $23.15, shares could easily trade down to the lower edge of the macro downtrend channel at around $16.84. 

Overall…

Despite what appears to be an intriguing fundamental picture –- based solely on the numbers available to the public prior to Tuesday's headlines -- the charts tell a very bearish story for Sodastream.

A close at new all-time lows could signal bears to hold onto their positions ahead of even more potential downside.

Disclosure: At the time of this writing, the author had no position in the equities mentioned in this report.