You Were So Wrong About SodaStream

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SodaStream (NAS: SODA) and Green Mountain Coffee Roasters (NAS: GMCR) are passing ships in the beverage ocean.

Shares of Green Mountain may have surrendered nearly half of their value after the company posted disappointing quarterly results last week, but SodaStream opened 25% higher this morning on a better-than-expected report.

The dissimilarities don't end there.


Green Mountain had earlier told investors to expect net sales growth of as much as 50%, but it rang up a lot less. SodaStream grew its top line by 50% -- up to $87.9 million -- after telling investors to expect far less.

Green Mountain lowered its guidance last week. SodaStream is jacking its outlook higher.

Cutting the cord
I didn't understand last week's sympathy play, when investors sold off SodaStream on Green Mountain's report. Even if they both have similar razor-and-blade models, why not also dump video game console companies or razor manufacturers on the same basis?

Green Mountain even pointed to the unseasonably warm winter as killing demand for its seasonal cider and hot cocoa K-Cups. Well, if people aren't slurping down warm apple cider, aren't they reaching out for cooler beverages? We saw that on Monday, when Jamba Juice parent Jamba (NAS: JMBA) posted a 12.7% spike in comps at company-owned stores. Now we're seeing it in this morning's SodaStream numbers.

The company may have only seen a 15% increase in the number of starter systems it sold, but the higher-margin CO2 refills and soda flavors were up 29% and 52%, respectively. Soda sippers were also willing to pay more for all three products.

The end result is that SodaStream's bottom line grew even faster than the company's impressive 50% top-line pop. Adjusted earnings climbed 67% to $11.5 million -- or $0.55 a share. Analysts are still reporting their estimates in euros. The company has switched over to U.S. greenbacks, starting with this report. However, even after translating Wall Street targets into dollars, the pros were only expecting an adjusted profit of $0.45 a share on $73.7 million in revenue.

May all your days be fizzy
SodaStream's guidance for all of 2012 is encouraging. The pop star sees revenue growing 33% to roughly $384 million. It's eyeing earnings to grow 50% to roughly $41 million. Set aside the juicy implication of double-digit net margins -- for now. The big takeaway from the guidance is that SodaStream was only forecasting a 28% gain in revenue and 42% increase on the bottom line earlier this year.

There's a real market for this product. Even in Western Europe -- where the economy is sputtering and SodaStream has been at it far longer than it has been on this side of the Atlantic -- revenue still soared 50% during the period.

Remember when Primo Water (NAS: PRMW) was positioning its Flavorstation carbonated-beverage system as a worthy SodaStream challenger? Well, earlier this week the bottled-water company stuck to its uninspiring forecast of $15 million to $17 million in sales this year -- less than 5% of the revenue SodaStream is expecting.

SodaStream continues dousing naysayers, and investors couldn't be happier about that today.

Drink up
SodaStream is one of the many dynamic recommendations made to Rule Breakers subscribers over the years, but this is now a great time to discover the next rule-breaking multibagger that the newsletter has unearthed. It's a free report. Want it? Get it.

At the time this article was published The Motley Fool owns shares of SodaStream International.Motley Fool newsletter serviceshave recommended buying shares of Green Mountain Coffee Roasters and SodaStream International, as well as creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Green Mountain and Jamba. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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