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Bull of the Day: SodaStream (SODA)

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SodaStream International Ltd. SODA just reported its most successful quarter in company history. This Zacks Rank #1 (Strong Buy), once again, raised its full outlook for the year.

SodaStream makes and distributes home beverage carbonation systems called Sparkling Water Makers. These allow consumers to turn tap water into sparkling water and flavored sparkling water. Products are available at more than 80,000 retail stores in 45 countries.

Crushed it in the Second Quarter

On Aug 1, SodaStream reported its second quarter results and simply hit the ball out of the park.

Earnings were $1.14 versus the Zacks Consensus of $0.71, for a $0.43 beat.

It was the 12th consecutive beat in a row.

Revenue rose 31.3% to $171.5 million from $130.6 million a year ago due to growth in most of the company's geographic regions, but especially in Germany, France, Canada and the United States.

Gross margin skyrocketed 620 basis points to 59.3% from 53.1% in the year ago period.

The gains were due to leveraging fixed infrastructure costs on higher revenue, the additional gross margin associated with the new French distribution model and the positive FX impact.

Sales of the sparkling water maker units rose 22% to over 1 million in the second quarter and sales of gas refill units jumped 17% to an all-time record of 9.7 million.

It has really positioned itself as an alternative to the use of plastic bottles and that marketing appears to be working.

Raised Guidance Again

For the second quarter in a row, SodaStream raised full year guidance.

Revenue is now expected to rise 23% versus last year, up from its prior guidance of a gain of 15%.

Earnings are forecast to jump 31% over 2017 compared to the previous forecast of a gain of just 8%.

Given the bullish guidance, it's not surprising that analysts moved to raise their estimates.

3 estimates were increased for 2018, pushing the Zacks Consensus Estimate up to $4.45 from $3.59 in the last month. That's earnings growth of 35.3% compared to 2017.

The good times are expected to continue into 2019 too. The 2019 Zacks Consensus jumped to $5.19 from $4.04 after the earnings report, another 16.5% gain.

Shares Spike Higher

Shares are up 82% year-to-date and 341% over the last 2 years after investors abandoned the company in 2015.

That easily outpaces the NASDAQ over that 2-year period, which is up a solid 50%.

Even with the big gains in the shares, they aren't that expensive. SodaStream has a forward P/E of just 28.8.

For investors looking for a growth company that is bringing its "A" game, SodaStream is still one to keep on the short list.

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