Who says that companies can’t raise prices in tough times? Not Hansen Natural (Nasdaq: HANS). With its energetic nature, the company plowed through the current volatile market posting monster results.
Volume and revenue growth certainly can’t be taken for granted these days. Beverage-industry big dogs Coca-Cola (NYSE: KO) and Pepsi (NYSE: PEP) grew case volume just 3% and 2% respectively in the third quarter, while smaller player Jones Soda (Nasdaq: JSDA) seems to be fizzling away. Hansen Natural, meanwhile, delivered 5.9% volume growth on a price increase of 8.8%. Hey, maybe those energy drinks are addictive after all.
Anyway, based on these earnings numbers, it’s happy hour all around for Hansen. Net sales increased by 15.2%, and cost of sales paced slower at 14.1%, while operating expenses rose by almost 23%. Still, with rising commodity costs during the quarter, Hansen managed to grow net income by 14.5% and deliver a 17.3% increase in diluted earnings per share.
Not only is Hansen making money, but it’s saving money, too: The company increased its balance-sheet cash from $12 million to more than $256 million since the beginning of the year. If only we could get the rest of America to follow suit ...
The funny thing is that Hansen still feels that growth isn’t what it could have been given the economy, with sales in convenience stores being hit the hardest. It will be interesting to see if the dramatic drop in gas prices will trigger sales growth.
Hansen’s stock price has dropped more than 55% within the last year, and the stock has been dinged for not delivering the superstar growth that investors are used to. However, at its current P/E of 13.2, Hansen Natural looks cheap right now. The company continues to grow, stash away cash, and accrue no long-term debt, so even if times were to get tough, Hansen Natural would be poised to weather the storm.
Hansen Natural also has a history of being effective: Beyond its growth, the company has delivered a five-year ROI of 38.8%, compared to the industry average of 13.3%. At this price, it sure looks to me like Hansen Natural could pop at any time now.
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