SodaStream Crushes It (Again) ... but Is the Stock a Buy?

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Shares of SodaStream bubbled up more than 15% during intra-day trading Wednesday, after the company not only annihilated analysts' already-lofty expectations, but also raised its full-year 2013 guidance.

But with SodaStream now up more than 70% over the past year, including a 50% jump so far in 2013, what's an investor to do?

The numbers
SodaStream's second-quarter revenue increased 28.5% year over year to $132.4 million, while diluted earnings per share rose an even more impressive 33.3% to $0.60. For those of you keeping track, remember analysts were expecting earnings of only $0.57 per share on sales of $129.7 million.


Of course, it's hard to fault analysts for missing the mark when SodaStream keeps increasing its guidance.

Remember, in Q1, management raised their revenue and earnings forecast by another 2%, telling investors to expect full-year sales and earnings growth of 27% and 20%, respectively.

Sure enough, this quarter was no different, as strong unit sales growth for soda makers, gas refills, and flavors of 18%, 30%, and 25%, respectively, allowed SodaStream management to feel comfortable increasing their full-year 2013 revenue and earnings guidance. Now, they say, we should look for 30% sales growth in 2013 to just over $567 million, and 23% net income growth to around $54 million.

All in all, when we zoom out a bit, that represents solid progress for SodaStream toward achieving their previously outlined goal of $1 billion in annual sales by 2016, especially when we remember the current gains were achieved in spite of strong comps last year fueled by the launch of SodaStream's products at Wal-Mart here in the United States.

In fact, this growth also flies in the face of naysayers' concerns that SodaStream is a fad, and seems to indicate that more and more American homes are opening up to the idea of ditching traditional soda from the likes of Coca-Cola and PepsiCo .

The worries
Then again, that doesn't negate the possibility of competition down the road from other at-home beverage enthusiasts, the list of which most recently grew to include Green Mountain Coffee Roasters . Remember, reports surfaced earlier this month showing the Keurig-creator recently applied for a trademark for the word "Karbon," which will apparently describe Green Mountain's version of a machine "for the production of cold water soda, still, carbonated, and sparkling beverages."

Now, that doesn't mean Green Mountain's soda-maker will come to market anytime soon, and even then it would have its work cut out for it in trying to permeate SodaStream's home turf -- something with which other competitors have had little luck to date -- but who better than the company behind the popularization of at-home coffee makers to eventually slow SodaStream's rapid rise?

That's also not to mention other worrisome reports that SodaStream management may have been quietly trying to sell the company over the past few months to no avail, which not only calls into question their resolve in standing behind the company for the long term but also makes you wonder why no suitor has stepped forward to acquire the entire business.

Of course, the same report also pointed out Pepsi had wanted only to buy SodaStream's highly profitable CO2 refill business and not the appliance itself -- but can you blame them? As I pointed out in June, it simply wouldn't make sense for Pepsi to buy an entire product line that would cannibalize its core canned and bottled product sales, while at the same time angering the bottlers that rely on its enormous existing business to sustain their own operations.

Buy high, sell higher?
But despite the possibility that management may have been trying to sell themselves short, perhaps this solid report will both strengthen their resolve and encourage long-term investors that SodaStream is here to stay.

And even though the stock is up big so far in 2013, it's also worth noting the company has been growing into its valuation nicely, as shares currently trade for under 31 times last year's earnings and just over 20 times next year's estimates, which I think is a fair premium given SodaStream's growth.

In the end, then, I see no reason SodaStream won't continue to handsomely reward patient long-term investors who buy now.

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The article SodaStream Crushes It (Again) ... but Is the Stock a Buy? originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Green Mountain Coffee Roasters, PepsiCo, and SodaStream and owns shares of PepsiCo and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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