SodaStream International (SODA) Tops Q1 Earnings, Lifts View

SodaStream International Ltd. (NASDAQ:SODA) reported impressive results for the first quarter of 2017, beating the Zacks Consensus Estimate on both the counts.

The company’s adjusted earnings per share of 66 cents surpassed the Zacks Consensus Estimate of 38 cents by 7.37%. Earnings increased a robust 127.6% on a year-over-year basis as well.

Revenues

Total revenue of $115.3 million beat the Zacks Consensus Estimate of $109.8 million by 5%. Sales rose 14.3% year over year on increased demand in each of the company's four geographic regions.

Geographic Breakdown

Sales rose 12% in Western Europe, owing to double-digit growth in Sparkling Water Maker units and gas refill sales across key markets in Western Europe, Germany, France, Nordic, Switzerland, Benelux and Austria.

SodaStream’s revenues from the Americas increased 12% on the back of strong growth in Canada and the U.S. In both the countries, sales were driven by strong sparkling water maker sales.

In the Asia Pacific, revenues increased 38% year over year on strong demand in Japan.

In Central & Eastern Europe, Middle East, Africa (CCEMA), sales rose 15% year over year on solid sales of sparkling water makers and gas refills to Czech distributor.

Inside the Headline Numbers

Gross margin rose 200 basis points (bps) year over year to 52.7% driven by production optimization, leveraging of fixed infrastructure for increased production volume and the introduction of the higher margin "Fizzi" machine.

EBITDA was $20 million, up 62.9% year over year.

Operating income was $15.9 million, up 100.3% year over year, driven by lower operating expenses and gross margin improvement.

Effective tax rate of 12.9% was less than 13.1% recorded in the prior-year quarter.

SodaStream International Ltd. Price, Consensus and EPS Surprise

Balance Sheet

The company has cash and cash equivalents of $80.4 million as of Mar 31, 2017, compared with $50.5 million in the prior-year quarter.

2017 Guidance

Revenues are expected to increase approximately 7% year over year to about $510 million, compared with $476 million in 2016 and also up from the previous guidance of mid-single-digits. Second-quarter revenues, on a reported basis, are expected to increase in the 7% to 8% band.

The fully diluted share count for 2017 is expected at around 23 million, compared with $21.5 million in 2016.

Gross margin is anticipated at approximately 52%, including 150 bps of a headwind from currency translation.

Operating income on a constant currently basis is expected to increase approximately 40%, higher than 30% expected earlier.

Zacks Rank & Stocks to Consider

SodaStream carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Consumer Products - Discretionary industry include Party City Holdco Inc. (NYSE:PRTY) , NutriSystem Inc (NASDAQ:NTRI) and PCM, Inc. (NASDAQ:PCMI) .

NutriSystem and PCM sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Full-year 2017 earnings at NutriSystem are expected to increase 37%.

PCM surpassed earnings in all of the past four quarters, the average beat being 74.35%.

Party City, a Zacks Rank #2(Buy) stock, is expected to witness 11.9% growth in 2017 earnings.

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