SodaStream Is a Pop Star

Psst! Maybe it's time you stop calling SodaStream (Nasdaq: SODA  ) a fad.

The company behind the popular home-based soda makers posted blowout quarterly results this morning.

Second-quarter revenue soared 49% to $103 million, blasting through the $90.6 million that analysts were expecting.

Revenue generated in North and South America more than doubled -- and more than tripled in the Asia-Pacific region -- but even SodaStream's more established Western Europe market benefited from a 25% top-line spurt.

SodaStream's growth was even across categories as well. Starter kits and consumables (consisting of the CO2 carbonator refills and the individual bottles of soda flavors) were both up 49% in terms of revenue. In other words, folks are still buying new systems and those who own them are still using them.

The only minor blemish in the report is that the path down the income statement wasn't as kind. Gross margins improved, but operating margins slipped as SodaStream ramped up its stateside promotions and took on its distribution in the Nordics. Despite shelling out a much lower effective tax rate this time around, earnings climbed just 44% to $0.45 a share or up 41% to $0.52 a share on an adjusted basis after backing out share-based compensation expenses.

Yes, even the blemish looks pretty sharp.

SodaStream is bumping its guidance higher. The Israeli-based company now expects revenue to climb 40% to $289 million for all of 2012. SodaStream was previously only targeting 33% in top-line improvement. Net income should climb 55% to $27.5 million, and that includes share-based expenses of $5.6 million. Its earlier outlook was calling for profitability to grow by 50% in 2012. Based on the company's current 20.9 million shares outstanding, that breaks out to an adjusted profit of $1.58 a share.

It should've been easy to see this quarter coming. SodaStream began offering its products through Wal-Mart (NYSE: WMT  ) back in May, exposing the product to shoppers of the world's largest retailer. If we look back at the beverage-related reports earlier this earnings season -- as smoothie specialist Jamba (Nasdaq: JMBA  ) served up a 5.7% uptick in comps and Green Mountain Coffee Roasters (Nasdaq: GMCR  ) posted disappointing K-Cup sales -- we see the cool beverages winning over warm ones, even accounting for the factor of seasonality.

Growth in the Americas and Asia will naturally decelerate, but SodaStream has already indicated that it plans to enter Greece and India next year. There's a world out there to cool down, and SodaStream is just starting to heat up.

Drink up
SodaStream is a blazing consumer-facing growth stock, and it's just the kind of stock that legendary investor Peter Lynch used to single out before his peers. A new report singles out three millionaire-maker stocks in that same mold. SodaStream isn't one of them, but the free report should open up a few opportunities for you to consider. Check it out now.

The Motley Fool owns shares of Green Mountain Coffee Roasters and SodaStream International. Motley Fool newsletter services have recommended buying shares of SodaStream International and Green Mountain Coffee Roasters. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free 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 the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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