We’re taking a close look at National Beverage Corp. (FIZZ), the company behind popular brands like LaCroix and Rip It. Our analysis today focuses on their most recent reported quarter, the third quarter of fiscal year 2025, which ended on August 2nd. This deep dive comes just ahead of their upcoming earnings call on December 12th, where we expect to hear about their performance for the fourth fiscal quarter.
What stands out immediately is the near-flat revenue growth and an earnings per share (EPS) figure that fell short of analyst expectations. Despite these top-line challenges, the company continues to demonstrate robust financial health, particularly in its cash generation and balance sheet strength. Let’s break down what these numbers truly mean for you as an investor.
Breaking Down the Financial Results
Let’s walk through the key numbers from FIZZ’s latest report together. We want to understand not just what the figures are, but what they tell us about the business’s current state and future prospects.
Revenue: Where the Money Came From
National Beverage reported total revenue of $330.5 million for the quarter. This represents a very modest 0.30% growth year-over-year, essentially flatlining compared to the same period last year. This near-stagnant growth suggests that demand for their products, including flagship brands like LaCroix, might be facing headwinds in a competitive market.
We believe this flat revenue is a critical point for investors to consider. It tells us that while the company is maintaining its sales volume, it’s not expanding its market share or increasing prices significantly enough to drive meaningful top-line expansion. This trend could reflect increased competition in the sparkling water and energy drink segments, or perhaps shifting consumer preferences.
Profit and Margins: Is the Company Making Money Efficiently?
Despite the flat revenue, FIZZ maintained healthy profitability. The company posted a gross margin of 37.96% and an operating margin of 21.41%. These figures indicate that FIZZ is managing its cost of goods sold and operating expenses effectively, which is crucial when revenue growth is slow.
Net income for the quarter came in at $55.76 million, translating to earnings per share (EPS) of $1.98. However, this EPS figure missed the single analyst’s estimate of $2.06 by 3.88%. This slight miss, coupled with flat revenue, indicates that even with strong cost control, the lack of top-line growth can still impact bottom-line expectations.
Cash and Debt: Financial Health Check
Looking at the balance sheet, FIZZ appears remarkably financially sound. The company holds a substantial $249.8 million in cash and equivalents. This strong cash position provides significant flexibility for future investments, potential acquisitions, or shareholder returns.
Total debt stands at a very manageable $69.9 million, which is low relative to their cash reserves and overall assets. This tells us FIZZ is not burdened by high interest payments and has ample liquidity. We view this as a major positive, ensuring the company can navigate economic uncertainties without significant financial strain.
Cash Flow: Follow the Money
Cash flow from operations was robust, reaching $59.08 million for the quarter. After accounting for capital expenditures of $3.095 million, FIZZ generated an impressive $55.99 million in free cash flow. This demonstrates that the company’s profits are translating directly into real cash, which is a hallmark of a healthy business.
Strong free cash flow is vital because it’s the money a company has left over to pay down debt, issue dividends, repurchase shares, or invest in growth initiatives. For FIZZ, this cash generation confirms its operational efficiency, even with modest revenue expansion. Investors should appreciate this consistent ability to convert earnings into tangible cash.
Comparing to Last Year: Growth Trends
Let’s put this quarter’s performance into perspective by comparing it to the same period last year. This helps us understand if the business is accelerating, slowing down, or maintaining its pace.
| Metric | This Quarter (Q3 FY25) | Last Year (Q3 FY24) | Change | What It Means |
|---|---|---|---|---|
| Revenue | $330.5M | $329.5M (est.) | +0.30% | Revenue growth is nearly flat, indicating a struggle to expand sales. |
| Profit (Net Income) | $55.76M | N/A | N/A | While specific prior-year net income isn’t provided, the EPS miss suggests profit growth may also be challenged. |
The minimal revenue growth of just 0.30% year-over-year is quite telling. It suggests that FIZZ is currently in a holding pattern, struggling to find new avenues for significant expansion. This trend indicates that the company’s established brands might be reaching maturity in a highly competitive market.
We believe this lack of substantial year-over-year growth means investors should temper expectations for rapid appreciation based on expanding sales. Instead, FIZZ’s value proposition may lie more in its stability and cash generation rather than dynamic growth. The upcoming earnings call will be crucial for any updated insights into these trends.
Quarter-to-Quarter Momentum
While we don’t have direct quarter-over-quarter comparison data in detail, the near-flat year-over-year revenue growth for Q3 FY2025 suggests that business momentum isn’t currently building. In the beverage industry, seasonal factors can play a role, but consistent low growth often points to broader market dynamics.
Our take on momentum is that it appears stagnant. Without new product innovation or significant market share gains, FIZZ seems to be maintaining its ground rather than gaining speed. Investors should watch for any signs of acceleration or deceleration in the upcoming Q4 earnings report.
Business Segments: What’s Working and What’s Not
National Beverage Corp. operates a diverse portfolio, including sparkling waters like LaCroix, energy drinks such as Rip It, and carbonated soft drinks like Shasta and Faygo. Without detailed segment breakdowns, we have to infer performance from the overall numbers.
Sparkling Water (LaCroix)
LaCroix has been a significant growth driver for FIZZ in the past, capitalizing on the shift towards healthier beverage options. However, the flat overall revenue suggests that this segment might be facing increased competition from numerous new entrants and private label brands in the sparkling water category. Maintaining market share and consumer preference here is critical.
Energy Drinks (Rip It) and Soft Drinks (Shasta, Faygo)
The energy drink market is also fiercely competitive, while the traditional carbonated soft drink market generally sees slower growth. These segments likely contribute to FIZZ’s stable revenue base but are unlikely to be the primary drivers of significant future growth. Innovation and effective marketing are key to holding their own.
What Management Is Saying: Forward Guidance
Unfortunately, the company did not provide specific forward guidance for future earnings per share or revenue in their most recent report. This lack of explicit guidance can sometimes leave investors feeling a bit in the dark about management’s expectations for upcoming periods.
When a company doesn’t issue guidance, it can indicate a conservative stance, or perhaps a period of uncertainty where management prefers not to commit to specific numbers. We will be listening closely during the upcoming Q4 earnings call on December 12th for any hints or qualitative insights into their outlook for the next fiscal year. This will be crucial for understanding their strategic direction.
What Wall Street Thinks: Analyst Views
The analyst community’s view on FIZZ is quite limited, with only one analyst currently covering the stock. This single analyst has a “Sell” recommendation, which is a notable point for investors to consider. A lack of broad analyst coverage can sometimes mean less institutional interest or lower visibility for the stock.
This analyst has set a target mean price of $39.00, which suggests a modest upside from the current trading price of around $35.15. While this target indicates some potential appreciation, the “Sell” rating implies caution. We believe investors should weigh this limited, somewhat bearish sentiment carefully, especially given the company’s flat revenue growth and recent EPS miss.
Valuation: Is the Stock Cheap or Expensive?
Let’s talk about the price you’re paying for FIZZ. The stock currently trades at a trailing P/E ratio of 17.75 and a forward P/E of 17.06. Compared to its sector, Consumer Defensive, these ratios appear reasonable for a company with stable, albeit flat, revenue and strong cash flow.
The price-to-sales ratio is 2.74, and price-to-book is 6.46. While the P/E ratios are not excessively high, they reflect a company that isn’t growing rapidly. Based on market data from Yahoo Finance, FIZZ’s valuation seems fair for a defensive stock with a solid balance sheet, but it’s not screaming “bargain” given the limited growth. Investors should consider if this valuation adequately compensates for the current growth trajectory.
My Bottom Line: What This Means for Investors
- Flat Revenue Growth is a Concern: The 0.30% year-over-year revenue growth is almost negligible and suggests FIZZ is struggling to expand its top line in a competitive beverage market. This lack of growth limits the potential for significant stock price appreciation driven by increasing sales.
- EPS Misses Estimates: The reported EPS of $1.98 fell short of the analyst’s $2.06 estimate. While the miss was small, it highlights the challenge of meeting expectations when revenue growth is stagnant, even with good cost control.
- Exceptional Financial Health: FIZZ boasts a very strong balance sheet with substantial cash reserves ($249.8M) and minimal debt ($69.9M). The company also generates robust free cash flow, which is a significant positive for long-term stability and potential shareholder returns.
- Limited Analyst Coverage and Bearish Sentiment: The stock has very little Wall Street attention, with only one analyst currently covering it and issuing a “Sell” rating. This lack of broad interest and the cautious recommendation warrant investor attention.
- Overall Verdict: A Stable but Stagnant Performer: FIZZ appears to be a financially healthy, defensive company that generates consistent cash. However, its current lack of growth makes it more of a value or income play (if it paid a consistent dividend, which it doesn’t currently) rather than a growth stock. We believe investors should approach FIZZ with caution, recognizing its stability but also its current growth limitations.
Risks You Should Watch
Every investment comes with its own set of risks, and FIZZ is no exception. Here’s what we believe investors should keep a close eye on:
- Intense Competition and Changing Consumer Tastes: The beverage industry, especially sparkling water and energy drinks, is highly competitive. FIZZ’s core brands face constant pressure from new products, private labels, and shifting consumer preferences towards healthier or novel drink options. A failure to innovate could lead to further market share erosion.
- Lack of Revenue Growth: The most significant risk we see is the company’s inability to generate meaningful top-line growth. If revenue remains flat or declines, it will be increasingly difficult to grow profits, even with efficient cost management. This could cap the stock’s upside potential.
- Input Cost Inflation: FIZZ, like all beverage companies, is exposed to rising costs for ingredients, packaging, and transportation. While they’ve managed margins well recently, sustained inflation could squeeze profitability if they can’t pass costs on to consumers through price increases.
- Low Analyst Coverage: With only one analyst covering the stock, FIZZ has less visibility and potentially lower liquidity compared to larger, more widely followed companies. This can sometimes lead to greater price volatility on news events or make it harder to gauge broader market sentiment.
Despite these risks, FIZZ’s strong balance sheet and consistent cash flow provide a cushion. However, investors need to monitor these factors closely to ensure the company can navigate a challenging market and potentially reignite growth.
Frequently Asked Questions (FAQ)
Question 1: What were FIZZ’s key financial results for the last reported quarter?
For the third quarter of fiscal year 2025 (ending August 2nd), National Beverage Corp. reported $330.5 million in revenue, which was nearly flat with only 0.30% year-over-year growth. Net income was $55.76 million, resulting in an EPS of $1.98, which slightly missed analyst estimates. Despite the top-line challenges, the company maintained strong gross and operating margins at 37.96% and 21.41% respectively, showcasing efficient cost management.
Question 2: Why did FIZZ’s revenue growth slow down significantly?
The significant slowdown, or rather the near-flat revenue growth, is likely due to intense competition within the non-alcoholic beverage sector, particularly in the sparkling water market where LaCroix operates. Increased saturation, new product launches from competitors, and evolving consumer preferences could be making it challenging for FIZZ to expand its sales base. Without detailed segment data, we infer that the overall market is proving difficult for growth.
Question 3: Is FIZZ financially healthy?
Yes, FIZZ appears to be in excellent financial health. The company boasts a substantial cash position of nearly $250 million and very low total debt of only $69.9 million. This strong balance sheet is further supported by robust operating cash flow of $59.08 million and free cash flow of $55.99 million in the last quarter, indicating efficient operations and ample liquidity. This financial strength provides a solid foundation, even with slow revenue growth.
Question 4: What does the analyst community think about FIZZ?
Analyst coverage for FIZZ is very limited, with only one analyst currently providing a recommendation. This sole analyst has issued a “Sell” rating for the stock, with a price target of $39.00. This suggests a cautious outlook from the professional investment community, likely influenced by the company’s flat revenue growth and the recent earnings per share miss.
Question 5: Is FIZZ stock a good investment right now?
Based on our analysis, FIZZ presents a mixed picture. It’s a financially healthy company with a strong balance sheet and excellent cash generation, trading at a reasonable P/E ratio for a defensive stock. However, its near-flat revenue growth and the recent EPS miss, combined with limited and cautious analyst coverage, suggest that it may not be a high-growth investment. It could be suitable for investors prioritizing stability and cash flow over aggressive growth, but caution is warranted regarding its growth prospects.
Question 6: What should investors watch for in the upcoming earnings call on December 12th?
Investors should pay close attention to any commentary from management regarding future revenue growth strategies, especially for LaCroix and other key brands. We’ll be listening for insights into how they plan to address the competitive landscape and reignite sales. Additionally, any discussion on cost management, potential share buybacks, or dividend policies, and particularly any forward guidance, will be crucial, as specific guidance was not provided in the last report.
Question 7: How does FIZZ compare to its competitors in the beverage industry?
FIZZ operates in a highly competitive segment of the beverage industry, facing off against large established players and numerous agile startups in sparkling water, energy drinks, and soft drinks. While FIZZ stands out for its strong balance sheet and cash generation, its current growth rate of 0.30% trails many peers who might be innovating faster or capturing new market segments. Its defensive nature and established brands offer stability, but its growth profile is currently less dynamic than some competitors.