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Why NewAge Stock Popped on Tuesday

By Demitri Kalogeropoulos – Aug 10, 2021 at 3:28PM

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Wall Street cheered the latest earnings announcement from the healthy packaged-foods specialist.

What happened

NewAge (NBEV -33.33%) shareholders trounced the market on Tuesday. The stock was up 13% as of 3 p.m. EDT, even as the S&P 500 ticked slightly higher, according to data provided by S&P Global Market Intelligence.

The rally just erased part of the losses that investors have seen in recent weeks, though. It was sparked by a well-received earnings report from the organic and health-foods specialist.

Person in striped shirt drinking a beverage through a straw.

Image source: Getty Images.

So what

NewAge's sales shot up 98% in Q2, which ended in late June. That result essentially matched the prior-quarter's pace and was slightly worse than most investors expected. Yet Wall Street was excited about the consumer discretionary company's financial wins, nevertheless.

Gross profit margin jumped, and NewAge notched some efficiency gains from its recent beverage  and skin-care acquisitions. "The second quarter saw accelerated top- and bottom-line results," CEO Brent Willis said in a press release, "and continued income statement improvement."

Now what

NewAge is still posting net losses, even though adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) earnings have been positive for three consecutive quarters. Yet the organic sales increases, combined with rising margins, suggest a possible end to that red ink ahead.

If the company can keep improving these metrics, then the stock should see further market-thumping gains similar to today's spike.

Demitri Kalogeropoulos 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.

Stocks Mentioned

NewAge, Inc. Stock Quote
NewAge, Inc.
NBEV
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