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TheStreet Open House

Why SodaStream (SODA) Is Tanking Wednesday

NEW YORK (TheStreet) -- SodaStream (SODA) tumbled 9.2% to $57.86 on Wednesday after falling short on sales expectations.

The manufacturer of home carbonation kits reported third-quarter revenue of $144.6 million, 28.5% higher than a year ago. Revenue missed expectations of $145.2 million from analysts surveyed by Yahoo! Finance, though earnings of 90 cents beat expectations by 12 cents.

The Israel-based company said slower growth wasn't indicative of consumer demand, but rather retailers' inventory management.

"Retailers are rebalancing their inventories and it's not related to SodaStream," said CEO Daniel Birnbaum during a conference call. "There is that retail adjustment and it is material."

By region, sales increased 29% and 43% year over year in the Americas and Western Europe, respectively. In Asia-Pacific, revenue declined 21% due to business struggles in Japan.

"We're disappointed that our Japanese distributor is not properly supporting the brand with marketing investments and retail expansion," said Birnbaum. "We remain optimistic about the potential for SodaStream in Japan and we're evaluating the best options for this business going forward."

TheStreet Ratings team rates SodaStream International LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate SodaStream International LTD (SODA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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