Amidst a daily loss of 5.57% and a modest 3-month decline of 1.19%, National Beverage Corp (FIZZ, Financial) presents a unique case for valuation with an Earnings Per Share (EPS) of $1.68. Investors are keen to determine whether the current market price reflects the company's true worth. Is National Beverage (FIZZ) fairly valued at its current market price of $46.58 against a GF Value of $50.39? This article delves into a valuation analysis to answer this pivotal question. Continue reading for an insightful exploration of National Beverage's financial health and market positioning.
Company Introduction
National Beverage Corp is a prominent player in the U.S. non-alcoholic beverage sector, known for its functional drinks and the popular LaCroix sparkling water. With a diverse portfolio including Rip It energy drinks, Everfresh juices, and Shasta and Faygo soda brands, the company boasts a robust in-house production and distribution network. Controlled by CEO Nick Caporella, who owns over 73% of the common stock, National Beverage operates through various distribution channels, addressing markets from big-box retailers to small convenience stores and food-service providers. With a market cap of $4.30 billion and sales of $1.20 billion, the company's financial metrics, such as a 17.24% operating margin and a remarkable 53.93% Return on Invested Capital (ROIC), are testament to its solid market presence.
Summarizing the GF Value
The GF Value is a proprietary measure that estimates the intrinsic value of a stock like National Beverage (FIZZ, Financial), taking into account historical trading multiples, a GuruFocus adjustment factor, and future business performance projections. When a stock's price significantly exceeds the GF Value Line, it suggests overvaluation, potentially leading to poor future returns. Conversely, a price below the GF Value Line may indicate undervaluation and the prospect of higher future returns. Currently, National Beverage's stock is considered fairly valued, suggesting that its long-term return should align closely with the company's growth rate.
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Financial Strength Analysis
Investing in companies with robust financial strength is crucial to minimize the risk of capital loss. National Beverage's financial strength is underscored by a cash-to-debt ratio of 5.33, surpassing 67.59% of its industry peers. This financial prowess is further affirmed by GuruFocus' strong financial strength rating of 8 out of 10 for the company.
Profitability and Growth Prospects
Profitability is a key indicator of a company's investment potential, with National Beverage showcasing a decade of consistent profits. The company's impressive operating margin of 17.24% ranks it ahead of 82.73% of its industry competitors. Moreover, National Beverage's growth metrics, including a 3-year average EBITDA growth rate of 3.9%, places it above 50% of the companies in the Beverages - Non-Alcoholic industry, highlighting its competitive edge in growth.
ROIC vs WACC: A Measure of Value Creation
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is an effective way to gauge a company's value creation. National Beverage's ROIC of 53.93 significantly surpasses its WACC of 7.15, indicating that the company is efficiently creating value for its shareholders.
Conclusion
In conclusion, National Beverage (FIZZ, Financial) appears to be fairly valued, with strong financial health and robust profitability. Its growth outperforms half of its industry counterparts, suggesting a stable investment profile. For a detailed view of National Beverage's financials, investors can review its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
