Fevertree Drinks Share Discussion Threads

[fuji99] 20/1/2020 10:12

Latest comment from the BBC - "Commenting on premium tonic producer Fevertree's latest update, Nicholas Hyett, equity analyst at Hargreaves Lansdown, said:

"Fevertree’s full year trading update made for ugly reading. Falling sales in the UK will inevitably spark fears the gin boom has turned to bust, while guidance for weaker sales in the US and lower margins undermine

"The problem is that Fevertree’s past successes mean expectations are high. Year-on-year growth of 9.7% would be music to the ears of many consumer goods groups, but Fevertree’s rating means investors demand more of it, and if it loses its sparkle the shares will quickly go flat – as they have been today.

"Incumbents in Fevertree’s new markets have learnt from Schweppes’ mistakes, and with tonic water less popular outside the UK in any case, it looks set to be an uphill struggle from here.

"We should be clear, Fevertree has an excellent business model with a very strong brand. The question is whether it’s premium mixers can continue to justify a premium rating.”

[dagsteeth] 20/1/2020 10:09

Sad to say Feverteee was valued on a stratospheric growth forecast. What these results have shown is that the U.K. is saturated and competitors have developed cheaper alternatives. Some practical examples: Ba have shelved Fevertree from their offering; many pubs are now offering cheaper mixers. The effect of this is two pronged. While Fevertree will still grow from a low base outside the U.K., those markets will not see the explosive growth which the U.K. did. And also, margins, given competition will return to earth with a bang. While Fevertree remains a very good company, its valuation needs to come down form 40x pe to around 15x in line with other drinks companies. This means a slow deterioration to around £10 a share. At that level the coca colas and PepsiCo’s would see a bid at £12-£14 given the synergies making sense and that’s when the Fevertree story will come to an end. I’d give the end game about a year for now and certainly wouldn’t be buying now In the hope of a bounce. The direction of travel is crystal clear

[trt] 20/1/2020 10:06

Profit warnings always come in threes so be careful.

[kinwah] 20/1/2020 10:05

Looking at the statement as I try and interpret the clever wording, they have implied that first half UK sales will be significantly down and it will only be in the second half where monthly comparatives against a year ago are expected to show an increase. That could mean UK sales being significantly down in 2020. This would be consistent with my reading of the stocking situation - full shelves of slow moving multipacks in my local supermarket and probably half-used multipacks in customer homes. If that's the case, in the absence of a bid I don't see the shares recovering without some positive overseas trading news.

[sogoesit] 20/1/2020 10:02

Thanks hp., very kind.
CTiger is very well worth reading for his anecdotal inside info. imv, (see DTG).

By the way, I think a PEG of 2 on forward earnings is a relatively high valuation.
I seem to recall that Slater uses 0.75 for "good value" at entry and, in my view, 1.75+ would probably be over-egging a growth valuation.

Good luck.

[juzzer100] 20/1/2020 09:58

FT is market leader already in UK, and, in case you forget, Q4 was somewhat uncertain here! Opportunity lies elsewhere - US, ROW.

[porsche1945] 20/1/2020 09:52

@ data. You are bang on and this is what I have been doing where I can, sell a few days before results and buy back once its out there, unless results are stunning everything is getting hammered on results nowadays, and most results are so so, lets face it the uk is going into a brexit induced recession as well. I am in Spain for the winter and Fevertree is nowhere to be seen here in the supermarkets and this is one of the biggest mixer markets, dont bleve all the hype. The earnings multiple was mad, same as asos which is under the cosh today as well, I am in at a price but they are still too expensive.

[hpcg] 20/1/2020 09:50

I can see this getting back to a 3 digit share price. Still knife catching going on, and the US markets are closed today so reduced oversight from there. Growth investors will be competing with each other to work out their positions. Very difficult to tell how long it will take to bottom; could be an end of day swoon, perhaps 3 black crows, or maybe just a gradual ramp down with some cliffs as revised broker notes come out. Britvic trades at 1.5X sales, and Fevertree deserves a premium to that, perhaps 3X, and or a PEG of 2 maybe?

Edit - meant to say good calls from Castleford and Sogoesit. I've been trading it a bit, but not with any size as I have no insight into how their units might be shifting, easier to go short with more conviction now.

[datait2] 20/1/2020 09:50

im used to american stocks, but moved back to uk stocks now, id buy fevertree at £8,

I intend to see what happens after hours, to see if big intitutes are buying or selling.

[llama1978] 20/1/2020 09:49

£16 is a bargain if it gets bought out for £25... you’d kick yourself if it sold in a week!

[juzzer100] 20/1/2020 09:46

Nice to meet you. Welcome to this board!

[skinny] 20/1/2020 09:46

Post 6948 - that's fine if they update as per their .

[datait2] 20/1/2020 09:45

maybe juzzer, but not at this price it is not.

[juzzer100] 20/1/2020 09:43

Long term hold.

[datait2] 20/1/2020 09:41

top tip, sell a stock 2 days before earnings, rebuy 2 days after if the story holds good and it is priced fairly.imo

[datait2] 20/1/2020 09:37

use the jim slater, growth at reasonable price

[datait2] 20/1/2020 09:35

based on future growth of low digits, we then aim for a PEG of 1 with a matching p/e, so fair value would be market cap £900 , share price 800p

[christh] 20/1/2020 09:33

bonio10000
Yes celebrate have a party
I am losing a lot of dosh.
There you go, win some, lose some.

I do expect a recovery anyway as soon as panic subsides.

The news were factored in as it has fallen from the £30's to the £20's and below.

So go and enjoy yourself because I am losing money!

[bonio10000] 20/1/2020 09:20

Great month.

Brexit coming and Chisth loses money.

[steeplejack] 20/1/2020 09:10

Given the limited barriers to entry,it's extraordinary that this company ever reached 40 quid and commanded a rating normally afforded to high growth pharmaceutical and technology companies with patent right protection.Never owned this stock and probably never will.Missed the boat when the stock was under a tenner.However,the stock is probably now more vulnerable to a bid than it has been for many awhile.

[dround87] 20/1/2020 09:05

US growth down on last year. It's a big miss Chris. Don't be stupid. Acknowledge it.

[hjs] 20/1/2020 08:58

T/O coming.. .

[christh] 20/1/2020 08:56

Read the CEO statement
Strong performance delivered across the world except UK fell by 1.1%.
But they delivered 9.7% £260m revenue better than 2018.

[llama1978] 20/1/2020 08:54

Come on, someone buy them out for gods sake then I can get out of this game!