FIZZ is the kind of small soda pop company that you might like to root for, since it is the under dog compared to giants KO, PEP, and KDP. Its brands, LaCroix, Shasta, Faygo, Rip It energy, and Everfresh juice, and sub-brands LaCroix Cúrate and NiCola by LaCroix, are the kinds of offbeat, unusual drinks that feel less corporate than the giants. Its primary product is LaCroix, "Naturally Essenced Sparkling Water", packaged in highly and tropically colorful, artistically drawn containers. For any cafe or boutique sandwich shop trying to differentiate itself in order to sell $12 sandwiches vs. a fast-food $5 sandwich, a LaCroix beverage is a more correct pairing than Coca-Cola or Pepsi. For those seeking to avoid both sugar and artificial sweeteners, a flavored sparkling water would appear to be (or is) a healthier alternative as well, while preserving the fun of carbonation and at least some flavor.
LaCroix is the kind of soda you can make available to guests while maintaining a proper eminence front. For example, Stephen King and John Grisham compare what they are drinking, which turns out to be LaCroix, on a Zoom call on 5/1/20.
I found some other perspectives, including both color on its social media-based marketing, and skepticism about the authenticity of such stories and the product itself:
Huffpost: LaCroix's Massive Popularity Is Putting Major Pressure On Big Soda. "While it may seem like an overnight success to some, LaCroix has actually been around since the 1980s as a regional brand available only in the Midwest."
BuzzFeed: I Just Found Out What LaCroix's "Natural Flavor" Is And I'm Delighted. "And it greatly expands on the useless answer a LaCroix spokesperson gave the Wall Street Journal: "Essence is — FEELINGS and Sensory Effects!" *facepalm*"
Business Insider: LaCroix Needs a New Approach to Marketing (possible paywall)
Business2Community: Marketing That Doesn’t Look Like Marketing: The La Croix Story. "But recently, National Beverage had its marketing team scalped by Spindrift and Celsius, two other beverage companies with their own soda alternatives to sell."
Bloomberg Businessweek: Battle of the Bubbles. "...a legion of startups has rolled out “craft” sparkling water brands that promote artisanal ingredients, antioxidant boosts, and cannabidiol infusions"
Financial History
Data is from Macro Trends. Amounts are in millions of U.S. dollars. Shares are in millions.
2020 sales, margins, and EPS slipped a bit from 2019, although not as badly as KO, which perhaps relies more on restaurant sales. Overall, if we can assume that COVID-19 only temporarily impacted the realized sales of FIZZ beverages, then the sales trend is not completely broken. Still, MNST managed increases in 2020, so there is some cause to worry here.
Operating and net margins are fairly good, though not quite as full as KO, PEP, or MNST. Better, they have been consistent and have improved over time, showing a track record indicating a gradual improvement in the way the business has performed.
Return on equity is excellent. It does not buy back shares, however. How does National Beverage manage such a trim capital structure?
Although it does not pay a regular dividend, FIZZ pays frequent irregular dividends to shareholders. The column showing cumulative dividends paid plus shareholder equity indicates total economic return generated by the company since 2005. Most of the surplus earnings have been returned to long-term shareholders.
Valuation
The pessimistic scenario uses a 2020 EPS base and assumes that only modest growth can occur, with Bubly and the "craft" soda water brands crowding into the market. Optimistic uses the current consensus 2022 EPS estimate and fairly good growth for a longer time. Nominal uses FIZZ's previous peak EPS as a based. Consensus uses the actual EPS analyst consensus estimate for 2021. There are two additional scenarios, which use a lower 3% discount rate representing a prolonged severe recession environment.
As you can see from the tables, FIZZ appears to be trading above its DCF value, and even in an optimistic scenario there is not much gain available.
Short Story
FIZZ experienced a GME-like short squeeze spike in late January 2021. As of 3/15/21 about 23.78% of the float was shorted, or 5.5 million shares of the 93 million outstanding (post-split counts).
FIZZ split 2 for 1 on 2/19/21.
From the 2020 proxy, there are two major shareholders: Nick A. Caporella, with 34,247,886 shares or 73.4% of the share class; and IBS Partners Ltd., with 33,302,246 shares or 71.4% of the share class. These are pre-split share counts, however. Caporella is a General Partner of IBS, according to this site. In other words, FIZZ is very closely held, takeover-proof, and effectively private despite its public listing.
Although the stock is trading above its probably true value, shorting it profitably could be difficult. The company has a higher value to its insider shareholders than it does to a potential third-party acquirer.
Other Data Sources
National Beverage Corp.'s investor relations site, including annual reports, press releases, SEC filings.
Recent letter to shareholders.
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