FIZZ Countering Flat Soda Sales
National Beverage Corp.’s (FIZZ - Analyst Report) management is implementing a ‘fantasy of flavors’ strategy that emphasizes the expansion of a branded beverage portfolio of proprietary distinctive-flavored soft drinks, energy drinks, juices, and other specialty beverages.
Therefore, the company is less vulnerable to the negative carbonated soft drink 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 Hold rating is maintained.
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 18.6, we find the stock to be attractive, but not compelling since CSD volumes continue to decline and no earnings progress is expected over the next 12 months. The stock s target price is $10, based on a 20 P/E on trailing 12 month earnings.