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SodaStream Popped 26% Wednesday – Can It Continue To Climb?

SodaStream Popped 26% Wednesday – Can It Continue To Climb?

After reporting its “most successful quarter” ever, SodaStream’s stock skyrocketed. But can it continue to soar higher? Let’s find out.

SodaStream International’s (NASDAQ: SODA) stock was flying high on Wednesday, ending the day up just over 26% after the release of its stellar second quarter earnings report.

The quarter proved to be the company’s most successful quarter for earnings ever, and was more than triple its forecast for a gain in full-year earnings per share.

“We are extremely pleased to be reporting the most successful quarter in our company’s history,” CEO Daniel Birnbaum wrote in a note to investors. “I believe we are now positioned better than ever to drive continued growth and increased shareholder value over the long-term.”

After struggling for years, SodaStream’s stock hit its lows in 2016 and has since risen nearly 600% – and the stock is up 57% year-to-date.

The first catalyst for this recovery was the company’s decision to move toward advertising the healthier sparkling water beverages it’s machines could produce. The second was its expansion to Japan, where SodaStream has become a hit.

For Q2 2018, SodaStream reported earnings of $1.14 per share, smashing analyst projections of $0.74, and almost doubling earnings from the same quarter last year. Revenue came in at $171.5 million for the quarter, handily beating analysts estimates of $149.1 million.

Net income jumped 82% to $26.1 million. Gross margin rose 59.3% thanks to operating leverage and a new distribution model. Sales increased 22%, and the carbonated water machine maker’s gas refill units jumped 17% higher boosted by the company’s efforts to improve marketing of its home services.

“These results underscore the progress we are making toward our primary strategic objectives of expanding household penetration and increasing usage of our home carbonation system,” Birnbaum added.

But what was most promising, and what could continue to push the stock higher, was the forward guidance presented in the report.

SodaStream said that it anticipates earnings per share for 2018 to climb 31% higher than 2017 earnings, which is more than triple the previous estimate of an increase of 8%. Full-year revenue is expected to increase 23% from 2017. And they expect operating revenue to jump 44% this year.

The company hasn’t missed on earnings since 2015, which makes these guidance figures—alongside a strong Q2 earnings report—even more exciting.

But investors may want to consider waiting to buy as this week’s chart activity shows what may prove to be an exhaustion gap topping off an extended rally in the stock, a pattern that could send prices lower.

Such a scenario could be a nice buying opportunity for investors interested in SodaStream, which looks poised to continue to deliver impressive results.

Source: TradingView.

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