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Jefferies Pours Some Fizz On National Beverage's Earnings

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Jefferies Pours Some Fizz On National Beverage's Earnings

LaCroix parent company National Beverage Corp. (NASDAQ: FIZZ) on Wednesday reported fiscal fourth-quarter results, which prompted Jefferies to remain bearish on the stock.

The Analyst

Jefferies' Kevin Grundy maintains an Underperform rating on National Beverage with a price target lowered from $34 to $33.

The Thesis

National Beverage reported fourth quarter sales of $239.9 million, which beat Street's expectations but Grundy said gross margins were "much worse" than expected at 35.3% versus expectations of 38.3%. The company realized higher input costs and volume de-leverage in the quarter, which also prompted a notable operating income and earnings per share miss.

Meanwhile, third-party data from Nielsen points to a 9.8% decline in National Beverage's sales for the four-week period ending June 15. Grundy said the data also implies market share losses of 470 basis points over the past four weeks, 470 basis points over the past 12 weeks and 240 basis points over the past year.

By contrast, PepsiCo's (NASDAQ: PEP) LaCroix competitor Bubly gained market share over the same periods. Grundy said PepsiCo CEO Ramon Laguarta is "very focused" on supporting its sparkling water brand moving forward.

Growing competition in the sparkling water space is evident and the LaCroix will need higher levels of investments to stabilize, according to Grundy. Regardless, there is unlikely to be any quick, cheap, or even certain turnaround plan that warrants a cautious stance on National Beverage's margin recovery and top-line expansion.

Price Action

National Beverage closed Thursday higher by 4.3% at $44.06 per share.

Related Links:

Millennial Research Firm Says Young Consumers Still Love LaCroix

National Beverage Trades Lower As Company Faces More Questions Over LaCroix Ingredients

Photo credit: QuoteCatalog, Flickr

Latest Ratings for FIZZ

DateFirmActionFromTo
Sep 2019MaintainsNeutral
Sep 2019MaintainsNeutral
Jun 2019MaintainsUnderperform

View More Analyst Ratings for FIZZ
View the Latest Analyst Ratings

Posted-In: Bubly Jefferies Kevin GrundyAnalyst Color Earnings News Price Target Analyst Ratings Best of Benzinga

 

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