SODA Market Research & Analysis Report
Updated Jun 25, 2014

Growth and Balance Sheet

SODA reported for the first quarter ended March 31, 2014 that revenue was $118.2 million compared to $117.6 million in the first quarter 2013. EBITDA was $6.3 million compared to $16.4 million in the first quarter 2013. Net income was $1.8 million compared to $12.1 million in the first quarter 2013. Diluted earnings per share were $0.08, compared to $0.57 in the first quarter 2013. Gross margin for the first quarter 2014 was 52.3% compared to 54.5% for the same period in 2013. Sales and marketing expenses for the first quarter 2014 totaled $46.1 million, or 39.0% of revenue, compared to $38.9 million, or 33.0% of revenue for the comparable period in the prior year. The 600 basis point change in sales and marketing expenses as a percent of revenue was mainly attributable to an increase in advertising and promotion expense as a percent of revenue to 18.1% from 13.5% in the first quarter 2013.

Valuation

SODA PE stands at 10.47 below the industry average of 11.87, and below the S&P 500 average of 17.83.  The company is currently trading below the preferable P/E ratio of 15x. SODA current Price/Sales of 0.97 is above the average of its industry, of 0.82.  The beta of 2.13 implies higher volatility of the stock with respect to the S&P 500. SODA has shown positive earnings consistency over the last five years. SODA’s earnings per share over the last five years have increased by 55.00%. The current quarter earnings in comparison to the same quarter last year have increased by 23.44% which is above the required level of 15%.  SODA’s head to head comparison to its main competitor shows that the company has a gross margin below the average of its main peers, and one that is below the industry average. The operating margin is at the average of the selected peers and the industry. SODA’s twelve trailing months EBITDA is $1.72 billion, below the industry average. The company has a total debt to equity ratio of 51.27. SODA’s current price levels are above the preferable level is at the 52 week high of $82.16, and the technical indicators are bullish. SODA has a dividend payout ratio of zero%.

About SODA

SodaStream International Ltd. develops, manufactures, and markets beverage carbonation systems and related products. The company operates in four segments: The Americas; Western Europe; Asia-Pacific; and Central and Eastern Europe, Middle East, and Africa. It offers soda makers, exchangeable carbon-dioxide cylinders, which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water; and consumables, such as carbon-dioxide refills, reusable carbonation bottles, and flavors to add to the carbonated water. The company also sells accessories, including bottle cleaning materials and ice cube trays.

Competitor Comparison

Soda Stream International Ltd. (SODA) N.V.

Highlights

The Company develops, manufactures and sells soda makers and exchangeable carbon-dioxide (CO2) cylinders, as well as consumables, consisting of CO2 refills, reusable carbonation bottles and flavors to add to the carbonated water. The Company sells its products through more than 35,000 retail stores in 39 countries. [Πλαίσιο κειμένου: 1Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading recommendations on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.] The stock closed yesterday’s trading session at $35.52. In the past year, the stock has hit a 52-week low of $35.24 and 52-week high of $74.00. SODA has a market cap of $742.65 million and is part of the consumer goods sector.

• At-home pop leader  
• Big flavor portfolio
• Large international presence 

• EU sale concentration    
• Spare CO2 cylinders aren’t cheap      
• Syrups not as tasty   

SODA Intrinsic Value

Stock Valuation Model & Intrinsic Value Definitions

Investors should keep an eye open for stocks that are trading within 10% of their 52-week highs, as it is likely to continue in its upward trend. SODA's 52 week high is $74.00 current price is $35.52, is 52% below 52 week high.

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which in this model states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. The company has a P/E ratio of 23.74 below the average industry P/E ratio of 45.97 and is above the S&P 500 P/E ratio of 17.83.

When there is strong insider ownership which we define as 8% or more, management is more likely to act in the best interest of the company, as their interests are right in line with that of the shareholders. Insiders own 15.10% of SODA stock. Management's representation is large enough. This does satisfy our minimum requirement; companies that pass this test are more attractive to our valuation model

The model is using several technical indicators (MACD, RSI, MFI, OBV, position Indicators) to forecast the trend of the stock for 6 and 12 months, and assign a value.

SODA is trading in the range of $34.00 - $40.00 in the past 30 days. The stock has been showing support at $34.20 and resistance in the $37.40 range. The stock is trading below the 50-Day Moving Average and below the 200-Day Moving Average. The RSI(14) is 34.55. Our indicators give a bearish view on SODA.

The financial health of the company the higher the better, we evaluate all the financial ratios of the company.

Investor’s sentiment for the stock.

The model assigns a value according to analyst’s recommendation for the stock. Analyst rating on Reuters.com is 1 Buy, 2 Outperform, 9 Hold, 1 Underperform and 1 Sell.

We are searching for EPS numbers that are better than the previous year's. One dip is allowed, but the following year's earnings should be higher than the previous year. SODA’s annual EPS for the last 5 years were 0.78, 0.86, 1.34, 2.09, 1.96 this type of earnings action is positive.

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry. SODA’s have total debt/equity ratio of 4.66% which is positive.

The EPS growth for this quarter relative to the same quarter a year earlier is above the minimum 15% that this model likes to see for a "good" growth company. Stocks with improving earnings are worthy of your extra attention. SODA’s EPS growth for this quarter relative to the same quarter a year earlier is –91.67%, below our target.

This stock valuation model looks for annual earnings growth above 12%, but prefers higher than 20%. SODA’s annual earnings growth rate over the past five years is 62.41%, above the target growth rate.

¹Tradespoon Score and Outlook: This score conveys Tradespoon’s long-term outlook of 1 to 5 years for a particular stock. Tradespoon uses proprietary methods to rate its trading picks on a scale from 1 to 10, with a 10 being the most favorable expected risk and return outlook. To determine a stock’s rating, Tradespoon uses an advanced algorithm that factors in fundamental and technical analysis to determine a stock's expected risk and return.