Today's Perilous Reversal Stock: SodaStream International (SODA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified SodaStream International ( SODA) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified SodaStream International as such a stock due to the following factors:

  • SODA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $122.4 million.
  • SODA has traded 2.1 million shares today.
  • SODA is down 3.1% today.
  • SODA was up 6.7% yesterday.

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More details on SODA:

SodaStream International Ltd. engages in the development, manufacture, and sale of home beverage carbonation systems that enable consumers to transform ordinary tap water instantly into carbonated soft drinks and sparkling water. SODA has a PE ratio of 16.4. Currently there are 2 analysts that rate SodaStream International a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for SodaStream International has been 1.5 million shares per day over the past 30 days. SodaStream International has a market cap of $844.2 million and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 1.36 and a short float of 54.6% with 2.99 days to cover. Shares are down 13% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates SodaStream International as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and disappointing return on equity.

Highlights from the ratings report include:
  • SODA's revenue growth has slightly outpaced the industry average of 26.3%. Since the same quarter one year prior, revenues rose by 28.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SODA's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $4.95 million or 13.75% when compared to the same quarter last year. Despite an increase in cash flow, SODASTREAM INTERNATIONAL LTD's average is still marginally south of the industry average growth rate of 22.92%.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Household Durables industry average. The net income has decreased by 2.2% when compared to the same quarter one year ago, dropping from $16.77 million to $16.40 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, SODA has underperformed the S&P 500 Index, declining 24.78% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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