The arguments for buying National Beverage shares range from it being a big beneficiary of the sugar tax, sudden interest in the clean water business, and an uncanny 15-session-long winning streak that is fueled by hope that there is still some steam left.
The stock is up 65% already this year. It has a valuation premium over PepsiCo(PEP) , Coca-Cola (KO) , Dr Pepper Snapple (DPS) and Monster Beverages(MNST) . This is why National Beverage may be a risky bet today.
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National Beverage's revenues grew by a mere 2.7% annually over the past 10 years to $705 million in 2016. Its gross margins have stayed above 30% throughout the decade, as net income more than doubled over the same period.
Bulls are excited about National Beverage's fiscal Q3 revenue rising by 20%, to $195 million. Earnings per share (EPS) stood at 52 cents versus 24 cents in the same quarter last year. The company credited its stellar stock performance partly to the push by retailers toward healthier products.
However, there is nothing impressive about the company's current operating income levels. FIZZ generated $37 million as income before taxes in Q3, just as it had done in Q2. That figure was higher at $44 million in Q1.
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