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SodaStream Has Quietly Had A Really Nice Run

SodaStream Has Quietly Had A Really Nice Run

Sodastream International Ltd (NASDAQ: SODA) popped nearly 6 percent Wednesday after management reported fourth-quarter sales 5 percent above estimates. This marks SodaStream’s fifth consecutive positive quarter.

The company has been on a 300-percent run since February 2016, when it saw long-awaited relief from a three-year, 80-percent slide.

Trader Dennis Dick offered one theory justifying the sharp shift.

“When it’s straight up like that, from $25 for the last three months, you start to wonder if it’s not just a bit of a short squeeze,” Dick said on Benzinga’s PreMarket Prep radio show. He added, “Long term, I don’t get this story. It’s just not for me.”

It seems he’s not alone in his disinterest. Few analysts seem to have taken notice of SodaStream’s abrupt turnaround.

In fact, since the first earnings beat was reported in February 2016, only Roth Capital and Jeffries have issued ratings. Roth Capital responded to strong 2015 holiday figures with a Buy, but it downgraded SodaStream to Neutral following second-quarter results. Jeffries maintains a Hold rating on four occasions with three price target increases.

Prior to that, Susquehanna reacted to positive guidance in October 2015 by downgrading to Neutral with a $16 price target.

Shares are now trading above $50.

How Market Leaders Compare

SodaStream’s competitors have seen greater volatility and negative value shifts over the last year. PepsiCo, Inc. (NYSE: PEP) shares are trading up 8.2 percent over their February 2016 value, while The Coca-Cola Co (NYSE: KO) stock has declined 5.9 percent.

Related Link: How Sweet Were The Soda Pop Quarterly Prints?

Their unimpressive stock activity reflects equally unexciting financial reports. By slight figures, Pepsi beat fourth-quarter estimates on both revenue and EPS while Coca-Cola beat on revenue.

“The only thing concerning is Coke still hasn’t shown any life since its report,” Dick said. “Coke was leaking a little bit. Although, yesterday it finally got a green bar, and that’s what you wait for.”

What Makes The Difference

A couple factors have worked in SodaStream’s favor.

The company quietly rallied off the March 2016 buyout of competitor Keurig Green Mountain, Inc. and the June discontinuation of Keurig’s Kold maker.

It also bounced in March off the unveiling of SodaStream SPIRIT and advances to the SodaStream MIX, and again in May off an announcement of its homemade beer system.

In July, shares spiked on yet-unrealized rumors that Pepsi was interested in M&A action, and in November, Teleios Capital Partners bought a 5.7 percent stake in the company. SodaStream also won the approval of environmentalists for defying a cease and desist order from The International Bottled Water Association after endorsing home tap water over bottled alternatives.

Dick predicted that the company’s future value will be determined by investor attitudes rather than financial results.

“It’s all about sentiment now,” he said. “Sentiment’s more important than the report, itself.”

PreMarket Prep is a daily trading ideas show focused on technical analysis and early morning movers.

Listen to PreMarket Prep and chat LIVE with our hosts, guests and other listeners every weekday morning from 8–9 ET.

Image Credit: By Tony Webster from Portland, Oregon, United States - SodaStream Bottle, CC BY 2.0, via Wikimedia Commons


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