Little Pop from FIZZ Shares
National Beverage Corp. (FIZZ - Analyst Report) is implementing a ‘fantasy of flavors’ strategy that makes it less dependent on the negative carbonated soft drink (CSD) trend in the U.S. However, in the near-term, input costs are expected to continue rising due to double-digit increases in the prices of aluminum cans and high fructose corn syrup. The stock is rated a Hold.
As consumers increasingly focus on health and wellness, the consumption of caloric carbonated soft drinks has declined in the U.S. In reaction, management is concentrating on exploiting the rising consumption of products perceived to deliver health, wellness and/or functionality. With the company geared towards addressing changing consumer trends, any sudden shift in consumer preferences could severely affect sales.
The stock of National Beverage has traded in a P/E multiple range of 12.6 to 34.3 over the last five years. At the current P/E of 14.5, we find the stock to be attractive but not compelling, since CSD volumes continue to decline at almost a double-digit pace and no earnings progress is expected over the next 12 months. The stock’s target price is $8.00, based on a 16 P/E on trailing 12-month earnings.