Please ensure Javascript is enabled for purposes of website accessibility

Why Cott Corporation Stock Jumped 10%

By Daniel Sparks - Aug 4, 2016 at 8:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A higher gross profit margin, and a sensible acquisition, have Cott investors looking up.

What: Beverage company Cott Corporation's (PRMW 1.18%) stock jumped as much as 10.8% on Thursday, after the company announced second-quarter results and the acquisition of S&D Coffee and Tea. Shares closed the trading day up 9.97%.

Image source: Cott.

So what: Cott reported revenue and adjusted EPS of $765 million and $0.15, respectively. These figures compare to Cott's $780 million in revenue and adjusted earnings per share of $0.18 in the year-ago quarter.

Analyst estimates were in line with results. On average, analysts expected Cott to report revenue of $766 million and adjusted EPS of $0.15.

One of the most positive takeaways from the quarter was Cott's higher gross profit margin. For the quarter, Cott's gross profit margin was 33% -- up from 30.9% in the year-ago quarter.

Cott management confirmed the company "entered into a definitive stock purchase agreement to acquire S&D Coffee," a premium coffee roaster and provider of customized coffee, tea, and extract solutions.

"The acquisition of S&D is in line with Cott's strategy of focusing on acquiring cash accretive businesses with higher growth while continuing Cott's beverage diversification outside of carbonated soft drinks, shelf stable juices, and large format retail," the company said in a press release.

Now what: Looking forward, management believes its recent acquisitions can help the company generate between $395 to $435 million in operating cash flow in 2019. After backing out expected capital expenditures of $160 million to $170 million, Cott anticipates generating between $225 to $275 million in free cash flow in 2019.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Primo Water Corporation Stock Quote
Primo Water Corporation
$13.67 (1.18%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.