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Why New Age Beverages Stock Jumped Thursday

By Daniel Sparks – Updated Nov 16, 2018 at 9:43AM

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New Age cleaned up its balance sheet and beefed up its inventory headed into the fourth quarter.

What happened

Shares of New Age Beverages Corporation (NBEV), a beverage company that sells ready-to-drink tea, coffee, kombucha, and energy drinks and is preparing to launch a recently introduced line of beverages infused with cannabidiol (CBD), jumped on Friday. Shares climbed as much as 25.9% and are up 23.6% as of 1:05 p.m. EST.

The stock's rise follows the company's third-quarter earnings release. The stock likely benefited primarily from optimistic commentary from management in the release.

A chart showing a stock price moving higher.

Image source: Getty Images.

So what

For its third quarter, New Age reported revenue of $15.3 million, down from $16.8 million in the year-ago quarter. Net revenue less discounts, returns, and billbacks was $13.2 million, down from $15 million in the year-ago quarter. The company's loss per share widened from a loss of $0.01 in the year-ago quarter to a loss of $0.08.

But as New Age CEO Brent Willis noted in the company's third-quarter earnings release, New Age has "significantly strengthened" its balance sheet and cash position. By completing an $11.8 million underwritten offering, New Age eliminated all of its debt, purchased inventory, and secured a $12 million line of credit.

Now what

By purchasing inventory, New Age set itself up well for the fourth quarter. In the company's third-quarter earnings release, management said, "inventory purchases replenished New Age's supply chain in the last week of the third and first few weeks of the fourth quarter."

Looking ahead, Willis is optimistic:

Now, with the distribution breadth of our core brands and our ability to fulfill demand, the impending launch of our CBD portfolio, and next steps with strategic growth opportunities, we are confident in our ability to continue to drive excellent return for shareowners.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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