SodaStream (NASDAQ:SODA) will release its quarterly report on Wednesday, and investors are preparing for the possibility of something they haven't seen much of lately: falling earnings. Yet in the long run, SodaStream earnings appear poised to keep soaring, raising questions about whether the home-carbonation system maker will eventually start cannibalizing the businesses of soda giants Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP).

SodaStream jumped onto a kitchen appliance trend, but it has a much different marketing angle from those that home coffee brewers use. SodaStream promises not only cost-effective soda but also healthier offerings that cut down on environmental waste. As sentiment turns against PepsiCo and Coca-Cola for their perceived role in connection with the obesity epidemic in the U.S. and around the world, SodaStream has a unique opportunity to play to consumers' growing desire for healthier food and beverage options. Let's take an early look at what's been happening with SodaStream over the past quarter and what we're likely to see in its report.

Stats on SodaStream

Analyst EPS Estimate

$0.72

Change From Year-Ago EPS

(10%)

Revenue Estimate

$145.2 million

Change From Year-Ago Revenue

29%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can SodaStream really make a dent in Coke and Pepsi's business?
In recent months, analysts have made big moves in both directions on SodaStream earnings prospects, cutting third-quarter estimates by $0.20 per share but raising their fourth-quarter projections by $0.25 per share. The stock is up 9% since late July, but it's still trading below its best levels of the year.

SodaStream came into the quarter on a highly positive note, with second-quarter earnings that crushed expectations. Revenue gains of almost 29% led to 33% higher earnings per share, and SodaStream took the opportunity to raise its guidance for the year. In particular, sales growth in consumables like gas refills and flavoring outpaced soda-maker revenues, validating the company's razor-and-blades model for long-term growth.

The key to understanding SodaStream's disruptive capability is that Coca-Cola and PepsiCo have relied on consumers' willingness to make repeated trips to stores, lug heavy products home, and deal with the hassle of recycling used bottles and cans. By comparison, SodaStream's business model is simple and efficient, and the company is doing its best to position itself as a tiny game-changer standing up to its two giant competitors.

SodaStream's growth efforts haven't gone perfectly, though. A partnership with Samsung to build carbonation technology into Samsung refrigerators didn't go very well, as recent markdowns on the high-priced refrigerator line suggest that demand wasn't as strong as hoped. In addition, SodaStream hasn't done a good job of going beyond soft-drink flavors to incorporate popular cocktails like margarita or mojito flavoring in its U.S. market, although it does so internationally.

Yet for now, competitors have largely failed to strike back at SodaStream's threat. Unlike coffee makers, soda makers require CO2 gas tanks that SodaStream has used to try to create a barrier to entry against rivals. Moreover, with first-mover status, SodaStream is likely to stay popular even if rival machines do appear.

In the SodaStream earnings report, watch to see how the company's sales of flavors and gas refills fare. As more evidence comes in that users are sticking with their purchases, SodaStream will gain even more leverage against Coca-Cola and PepsiCo.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Coca-Cola, PepsiCo, and SodaStream. The Motley Fool owns shares of Coca-Cola, PepsiCo, and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.