Mr. Market is a tough critic.
The lingering fear that the Israeli-based company behind the home-based carbonated-beverage maker is a fad is refuted every fiscal period. Revenue soared 50% in its latest quarter, and adjusted earnings popped 67% higher.
Despite the consistent beats and heady growth, investors have a funny way of spitting SodaStream back out after every blowout quarter. Since peaking last summer at nearly $80 a share, the stock has shed nearly two-thirds of its value.
Some stocks deserve to get marked down when their growth stories turn flat, but SodaStream is as fizzy as ever.
The stock closed on Thursday at a little more than 20 times trailing earnings, and a mere 15 times next year's projected profitability -- which history already tells us is probably less than what SodaStream will ultimately earn.
Does that seem right for a company that's growing several times faster than its multiple suggests? Just compare SodaStream with some other fast-growing beverage-related companies.
Yes, Monster's a beast. Net sales climbed 28% during the first three months of this year. Net income surged 38% higher. That's pretty darn good, but we're talking about double the multiples for half the growth rates.
Really, Mr. Market? You do know that you can make carbonated energy drinks at home with SodaStream, right?
Starbucks isn't growing as quickly as Monster or SodaStream, though. Earnings climbed 18% during the first three months of this year on a 15% uptick in net sales. With a trailing P/E of 30 and a 2013 multiple of 22, once again we see the faster-growing SodaStream trading at a freakishly low earnings-based multiple.
SodaStream isn't perfect
SodaStream doesn't have the brand appeal of Starbucks or even Monster., but it is a global giant in some markets. SodaStream machines can be found in more than 20% of homes in Sweden, for example.
Its refillable CO2 cartridges are patent-protected, though obviously anyone can come up with flavored syrups. It will be validating to see Kraft
There's also the seemingly low barrier to entry. SodaStream has competition in some overseas markets, and it also has one notable rival here. However, Primo Water
Yes, growth will slow from here, but for now, SodaStream recently revised its guidance higher, and we're talking a rise in net sales and earnings of 35% and 50%, respectively. It's still not right that a company with that kind of growth -- bucking the faddishness complaints and trouncing Wall Street estimates -- can be had for just 15 times next year's earnings.
Wall Street doesn't have a drinking problem -- it has a thinking problem.
SodaStream is one of the many dynamic recommendations made to Rule Breakers subscribers over the years, but this is a great time to discover the next Rule-Breaking multibagger the newsletter service has unearthed. It's a free report. Want it? Get it.
The Motley Fool owns shares of SodaStream International and Starbucks. Motley Fool newsletter services have recommended buying shares of SodaStream International, Monster Beverage, and Starbucks and writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.