It's been a brutal year for SodaStream (NASDAQ:SODA) investors. Shares of the company behind the namesake maker of carbonated beverages have lost nearly half of their value.
It's not as if the bears have been taking over. Short interest is actually at a 52-week low. Bulls and bears are apparently steering clear of the dethroned market darling.
This leaves us with SodaStream reporting fresh quarterly results on Wednesday morning. There are a lot of things going on with the top dog in at-home carbonation. Let's check out a few of the things to watch out for heading into the report.
1. There has to be a U.S. turnaround plan
SodaStream has a long history of success in Europe and other overseas markets, but it's the recent push into the presumably soda-thirsty U.S. market that has been costing it dearly over the past year. It was a hit out of the gate in 2010, but things took a turn for the worse late last year -- and things have only continued to get worse since then.
We already know that the third quarter was a disaster. Shares of SodaStream took a hit earlier this month after posting preliminary results that spooked the market. SodaStream warned that revenue would clock in at about $125, well short of both the $144.6 million it rang up a year earlier and the $154.1 million that analysts were targeting. Its forecast calling for just $8.5 million in operating income means that Wall Street isn't going to get the profit of $0.68 a share that it was hoping for at the time.
The good news is that the ugly performance is already baked into the stock price. The one thing that will move the stock is its outlook for the holiday quarter and beyond. SodaStream blames the disappointing performance, once again, on the stateside shortfall with consumers buying fewer soda makers and flavors than they were a year ago. If it can't point to near-term improvement it will need to convince investors that it has a viable turnaround plan in place.
2. Pepsi to the rescue
Shares of SodaStream popped 15% higher on Friday -- giving battered investors a temporary reprieve -- after revealing that PepsiCo (NYSE:PEP) will test a limited number of PepsiCo flavors for SodaStream machines.
Sources tell Beverage Digest that this will be a 10-week test available only in select markets in Florida. The six available flavors -- Pepsi Homemade, Pepsi Homemade Vanilla, Pepsi Homemade Wild Cherry, Sierra Mist Homemade, Sierra Mist Homemade Peach, and Sierra Mist Homemade Cranberry -- will be unique "Homemade" brands that PepsiCo doesn't sell at the retail level.
SodaStream isn't likely to provide a lot of details on Wednesday morning, but it will be its first opportunity to discuss the potentially game-changing partnership.
3. The West Bank decision
There's one controversial sticking point with the way that SodaStream does business. The Israeli-based company has a factory in a disputed West Bank settlement. That's fine in the eyes of Israel and others, but it's illegal in the eyes of the United Nations and pro-Palestinian activists that have been staging worldwide retail boycotts of SodaStream's products.
In an interview with Israel's The Marker in late August, SodaStream CEO Daniel Birnbaum said that the company will decide within the next two months if it will close the factory. It was ramping up a new facility that is not on contested land. Well, SodaStream's Wednesday morning earnings call is conveniently two months later.
Birnbaum emphasized at the time that it will be solely a financial decision. It doesn't want to cave to activist pressure. However, given the major distraction at its stateside operations and weak stock price it wouldn't be a surprise if SodaStream tries to make the West Bank controversy a moot point.
Rick Munarriz owns shares of SodaStream. The Motley Fool recommends PepsiCo and SodaStream. The Motley Fool owns shares of PepsiCo and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.