Shares of Vita Coco (COCO 2.65%) were climbing again today after the leading coconut water company posted another round of strong results in its third-quarter earnings report as profit margins surged again.
As a result, the stock was up 12.8% as of 12:33 p.m. ET.
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Vita Coco does it again
Revenue in the third quarter rose 11% to $138.1 million, which essentially matched estimates at $138.3 million. The company also delivered a healthy improvement in gross margin, jumping from 26% in the quarter a year ago to 41%, due to lower transportation costs and higher Vita Coco pricing.
As a result, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped from $12 million to $27 million, and earnings per share doubled from $0.13 to $0.26, topping the analyst consensus at $0.24.
CEO Martin Roper said: "We are extremely pleased with this quarter's results with 11% net sales growth and Adjusted EBITDA of $27 million. Gross margins for the quarter exceeded our expectations due to better than expected price realization across our business, and the stabilization of our transportation costs."
The guidance is even better
Vita Coco also raised its guidance, calling for revenue growth of 13% to 15%, compared to previous guidance of 10% to 12% growth, due to mid-teens growth in the Vita Coco brand and strength in its private label channel. It also said it now expected to retain the majority of business from a key customer that it was set to lose.
On the bottom line, adjusted EBITDA projections rose from $56 million-$60 million to $64 million-$67 million, showing the increased revenue will flow through to the bottom line.
Vita Coco is the rare member of the 2021 initial public offering (IPO) class that has emerged as a winner in a difficult environment for consumer stocks. Shares have now nearly doubled from their $15 IPO price. The company is executing well and outperforming expectations, and it's penetrating a large addressable market with a healthy, on-trend beverage.
Gross margin won't ramp up forever, but the beverage stock still looks reasonably priced for its growth potential.
