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Why SodaStream Stock Rose 13.5% in March

By Demitri Kalogeropoulos – Apr 6, 2018 at 10:17AM

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Investors are feeling more confident about the beverage machine maker's sparkling profit outlook.

What happened

SodaStream (SODA) beat the market last month by gaining 13.5% compared to a 3% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

SODA Chart

SODA data by YCharts.

That boost added to a big rally for shareholders, who have seen their stock rise nearly 400% in the past three years.

So what

Investors pushed shares higher last month as they continued to digest SodaStream's latest operating trends. The at-home beverage maker announced an impressive growth spike back in February that also helped drive higher profit margins.

Sparkling soda in a glass with ice and a slice of lime on the rim

Image source: Getty Images.

In a more detailed report filed in late March, SodaStream revealed other positive news about the business, including the fact that machine sales jumped 24% in 2017 to reach 3.7 million units, up from 2.9 million a year ago.

Now what

SodaStream is expecting overall sales growth to tick down to about 12% this year from 14% in 2017. However, investors have a few good reasons to expect significantly higher profits.

First, selling prices on its machines are rising thanks to innovative launches like a new one-touch machine hitting store shelves right now. Second, the company should start logging more high-margin carbon dioxide canister refill sales since these purchases tend to lag machine sales by a few months. That bright earnings outlook could support continued gains in the stock, assuming sales growth keeps meeting management's targets.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of SodaStream. The Motley Fool has a disclosure policy.

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