Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



What SodaStream Needs to Have a Better 2014

SodaStream (NASDAQ: SODA  ) underperformed the market in 2013, with the stock rising sharply during the first half of the year only to give up almost all of its gains by year-end. Even as the home carbonation system maker's opportunity to pull customers away from Coca-Cola (NYSE: KO  ) and PepsiCo (NYSE: PEP  ) remains as compelling as ever, SodaStream faces challenges in continuing to build sales and convince more of its customers to commit to the long-term value proposition from its systems.

One particularly frustrating aspect of SodaStream's 2013 was that the company largely made good on its promises to produce solid growth. The company has consistently topped analyst estimates for profitability, and rising revenue not only from soda-maker sales but also from certain consumables has been promising. Yet investors seem uncertain about a potential exit strategy for the company after PepsiCo's rumored buyout offer at midyear last year turned out to have no substance. Let's take a closer look at SodaStream's prospects for 2014.

Stats on SodaStream

Average stock target price


Full-year 2013 EPS estimate


Full-year 2014 EPS estimate


Full-year 2013 sales growth estimate


Full-year 2014 sales growth estimate


Forward P/E


Source: Yahoo! Finance.

What's next for SodaStream in 2014?
As you can see above, SodaStream still has many analysts optimistic about its future, with target prices more than 50% above where the shares currently trade. That's much more attractive than the roughly 10% upside potential from Coca-Cola and PepsiCo, reflecting the sluggishness that the two beverage giants have seen in their carbonated drink businesses lately.

Slowing growth rates created a troubling trend that hit SodaStream hard last year. After solid financial performance throughout much of the year, SodaStream's third-quarter results sent shares plunging as the company missed revenue projections. Sales growth of 29% based on a 27% jump in starter-kit sales and a 34% rise in CO2 refills wasn't enough to keep investors bullish on SodaStream's prospects, as they instead worried about the mere 7% rise in flavor sales and the year-over-year decline in earnings.

Image source: SodaStream.

Yet SodaStream's potential remains enormous. A Harris Interactive poll conducted on behalf of the company found that almost half of those who responded said they'd enjoy getting a SodaStream as a gift. Compared to the less than 1% of U.S. households that actually have a SodaStream right now, it would take only a small fraction of those interested in having a machine to actually buy one in order to make a material difference to sales growth in the future.

Moreover, SodaStream needs to keep emphasizing its health advantages over Coca-Cola and PepsiCo products. Both of the beverage giants have faced increasing pressure about obesity and other health impacts from sugary soft drinks, while SodaStream's flexibility in letting owners change syrup levels or make spritzers from juice or other healthy drinks gives it a huge competitive advantage. Efforts like its GreenSanta campaign can highlight not only beneficial health impacts but also the environmental advantages of SodaStream over products from Coca-Cola and PepsiCo.

SodaStream's valuations are extremely attractive given current projections on likely growth for the company. Unless you believe that holiday sales are likely to come in well below expectations, SodaStream stock looks as if it has plenty of room to move higher in the months to come.

Rely on growth for your portfolio
When it comes to making the most of growth stocks, they said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Click here to add SodaStream to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2790639, ~/Articles/ArticleHandler.aspx, 9/5/2015 1:53:17 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated 4 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 3:59 PM
SODA $14.48 Down -0.11 -0.75%
SodaStream CAPS Rating: **
KO $38.52 Down -0.64 -1.63%
Coca-Cola CAPS Rating: ****
PEP $90.92 Down -1.21 -1.31%
PepsiCo CAPS Rating: *****