The non-alcoholic beverage sector is experiencing tremendous growth, with energy drinks and sparkling waters leading the way. National Beverage Corp (NASDAQ:FIZZ) is riding the wave and is well-positioned to benefit from this growing market. The company announced quarterly financial results that beat top-line expectations, driving the stock up 20% in the past few days.
Like other sector leaders, the company’s shares trade at a premium, reflecting its quality of earnings, long-term growth potential, and low volatility in the share price. It is a solid option for investors interested in exposure to the industry.
National Beverage Enjoys Thriving Brands
National Beverage Corp. is a beverage manufacturer focusing mainly on producing Power+ Brands, drinks designed for health-conscious and active individuals. Their portfolio includes a variety of beverages, from sparkling waters to energy drinks and juices.
The global market for sparkling water, a notable product line in the company’s portfolio, is expected to grow at a compound annual growth rate of 12.6% through 2028, driven by the increasing preference for healthier and innovative beverage options over traditional sodas and sugary drinks. LaCroix, one of National Beverage’s leading brands, currently enjoys a substantial 15% market share, making it one of the top three brands in the industry.
Further, energy drinks account for a significant 16% to 18% of the non-alcoholic beverage category and are expected to double in value by 2030, thanks to a forecasted annual growth rate of 13.6%. Traditional powerhouses like Red Bull and Monster (NASDAQ:MNST) continue to dominate, but the landscape is evolving into more healthy-oriented soft drinks.
National Beverage’s Recent Financial Results
The company recently published its 4th quarter financial results for FY2024. Reported revenue of $297.32 million surpassed analysts’ estimations of $291.02 million. Net sales saw a year-over-year increase of $11 million to $297 million. Additionally, gross margins grew 100 basis points to 36.7%, while net income increased by 20% to $44 million, driving earnings per share of $0.47, aligns with analysts’ estimates.
The corporation’s fiscal year performance included an increase of $19 million in net sales, which reached $1.2 billion. Operating profits grew substantially, rising 240 basis points to $218 million. Net income increased 24% to $177 million.
The company finished the quarter with a robust boost in reported cash, increasing by $169 million to $327 million. Lastly, management has declared a special cash dividend of $3.25 per share to its shareholders.
What Is the Price Target for FIZZ Stock?
Wall Street thinly follows the company, though the most recent analysts’ report following the fiscal Q4 took a cautious stance on the stock. UBS analyst Peter Grom recently raised the price target on the shares from $47 to $48 while maintaining a Sell rating. He noted that the fundamentals are improving, but the stock’s valuation is now “stretched.”
Based on recent analysts’ recommendations, National Beverage is rated a Moderate Sell. The price target on FIZZ stock is $48.00, representing a potential -7.03% downside from current levels.
The stock has been trending upward, climbing over 14% in the past year. It trades at the high end of its 52-week price range of $40.26 – $52.30 and shows ongoing positive price momentum, trading above the 20-day (47.33) and 50-day (44.48) moving averages. With an EV to EBITDA of 18.90, the shares trade at a premium compared to the Non-Alcoholic Beverages industry average of 17.07.
Final Analysis on FIZZ
National Beverage Corp has recently posted promising financial returns, showing robust growth in net sales, gross margins, net income, and reported cash. The company looks to continue its positive momentum and stands to gain significantly from expected growth trends. Despite trading at a rich valuation, the stock’s strong upward trend and solid financial performance make National Beverage Corp a potentially attractive prospect for those interested in investing in the non-alcoholic beverage industry.
