Fevertree Drinks Share Discussion Threads

[wetdream] 17/4/2017 21:25

Part of article in today's Times:
-----------

A surge in British gin and whisky drinking has led to the number of new distilleries increasing by almost a fifth last year.

According to HM Revenue & Customs 45 new distilleries opened, an increase of 17 per cent, and gin sales exceeded £1 billion.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “We have already seen how successful and in-demand British gin is to 139 countries around the world. But we believe that with the right support the industry can go further to access more markets overseas.”

UHY Hacker Young, the accountancy group, said that activity was being spurred by merger and acquisition deals in the “artisan”; alcohol sector.

[staverly] 17/4/2017 02:41

Reference to Brewdog's £1bn valuation (link below) augers well for FEVR. A quick look online suggests FEVR revenue must be at least 2-3x, probably more - not to mention considerably more profitable. DYOR

hxxps://www.thetimes.co.uk/edition/business/mergers-provide-a-tonic-for-gin-sales-f200pjbx5

[staverly] 15/4/2017 10:34

Finally got to try the Madagascan cola. It tasted pleasant enough without a mixer, excellent with. Okay, so i am biased!

[ccr1958] 14/4/2017 09:20

I have always liked the `buzz` of the Aim market , but in reality its get rich scheme for `Greedy often bent Boards` , My portfolio has much better stocks in it nowadays like this !!! ps. I like VATs ,so no brainer ;)

[wetdream] 13/4/2017 14:17

One of the more interesting features of FEVR's relentless share price rise is the almost total absence of bboard comment-pro or con.
Perhaps it's the absolute £price of the sp-so £10, £11 etc shares don't interest PIs, who may well prefer the sub£1 gambles.
Don't forget a lot of PIs claim to have been put off AIM shares permanently due to the number of recent collapses/rip-offs which have been well documented.

[staverly] 13/4/2017 13:50

w82 ... disagree because of unusually high margins. Note that like ASC, FEVR has ~50% GM, however while the former barely manages 6% PTP margin, FEVR monsters out at 34%. And there's no obvious reason to suspect any erosion. From a FCF perspective, again FEVR leaves ASC standing on a pound for pound basis. Don't forget ASC has 5 years head start. I can't see a good reason why FEVR won't be producing over £100m pa of FCF within the next 5 years (equates to 27% av.CGR). That, IMO, makes a nonsense of the current valuation. Opinions are what make this game interesting.

Given the stock now trades around £6.5m in value each day i seriously doubt PIs have any effect on the share price so, just to be clear, my posts are not seeking to persuade readers to buy.

DYOR

[sogoesit] 13/4/2017 12:27

On the other hand, if they come in, again, at 60+% growth for 2017 they could get to my £20 target sooner rather than later.
It's all a guessing game about spotting the turn to slower growth; place your bets and good luck!

[walbrock82] 13/4/2017 11:54

STAVERLY,

Reach the same consensus here about analysts estimate. If they upgrade revenue and earnings to 30% growth for both sales and earnings, then I would think the shares would trade flat for 3 or 4 months, before starting its ascent higher.

But, if estimates ARE for 15% growth, there could be a pullback in the share price,
£11 could be the resistance level.

[sogoesit] 13/4/2017 07:57

"happy-go-lucky share price chart crystal ball gazing".... what is this, some kind of professional association that knows what it's doing compared to "clueless amateur analysts"? ;-))))
I like the "happy-go-lucky" bit 'tho. Lol!

[staverly] 12/4/2017 19:01

In respect of expectations, that being the formal views of sell-side equity analysts (SSEA) - not happy-go-lucky share price chart crystal ball gazing, interesting to note that when market was updated last November, month before year end, SSEA increased their FY16 revenue estimate* to 93.8m (from 85.3m). In January, so immediately after the year end, BOD confirmed the actual number as 102.7m. This, IMO, suggests that management are conservative and/or SSEA asleep at the wheel. Either way, expectations are currently low.

* consensus provided by M*

[wetdream] 12/4/2017 16:57

Institutions + founders hold >60% of the stock.
Investec and Shore Capital have 'buy' recs out, so I guess they're partly responsible for the rise-if they keep to their word.

[staverly] 12/4/2017 14:40

W82 ... To the best of my knowledge only a handful of brokers currently cover FEVR. Their prevailing consensus in the context of FY17 sales and profits suggest that expectations are actually rather low. As a retail investor I haven't seen the source dox but my data vendor concurs with your figures. If the regular May trading update confirms that the brokers are (yet again) behind the curve, then radical revisions must surely follow.

BTW, since arriving last week, it's selling like hot cakes in my local village store.

[walbrock82] 12/4/2017 12:03

Fevertree Drink is a great and straightforward business to understand. The shares became an 11 bagger in just 28 months!

But analysts forecast for Fevertree going forward doesn’t look fundamentally great with estimates of revenue for 2017 and 2018 at £119m and £136m respectively.
Meanwhile, EPS is estimated at 26 pence/share for 2017, and 29 pence/share in 2018.
Remember, 2016’s EPS is 23.7 pence/share.


Below is a summary of Fevertree:
- The company sells premium mixers at 36 pence per 100ml vs. Schweppes’s 22 pence.
- It operates in over 50 different markets, especially in two most important locations of Europe and America.
- It raised £90m from its IPOs, this money is instrumental in paying off past loans.
-The net margin grew to 26%.
- Capex spending is £1m per year. But, as sales grow, will it have enough capacity to fulfil larger orders?
-Fevertree’s cash balance has ballooned from £3m to £33m making it cash generative.
-Management cash in some early success by selling combined shares worth £17m at £6.25 per share.
-Last year was a breakout year for Fevertree with revenue up 72%. But analysts could spoil the party if estimates of between 14% and 16% revenue growth for 2017 and 2018 comes true.
It would make the shares look overvalue.
-The share price more than doubled from a year ago.

Found the above information interesting, then click for more analysis and charts:

[wetdream] 12/4/2017 11:40

Imho the key to the next set of figures is their success, or otherwise, in the US.
Don't think we can keep expecting similar growth in the UK-although mentions on This Morning TV show, can't do any harm!

[sogoesit] 12/4/2017 10:20

Thanks bamboo; I seeded my new ISA with a Fever Tree yesterday at about 1565 coincidentally as I thought it looked like a pop.
I think this year has seen, and will see, the stock's "popularity" increase as we've seen with press coverage. This should add to momentum imv.

Indeed, Apad, thanks for the feed-back. It must be a fairly "cut-throat" business.

[bamboo2] 12/4/2017 08:47

Regarding the turn mentioned on 10/4/17, I think that it was marked by yesterdays low.

We currently have some trendline resistance to get through. Price is coiling, gathering strength.

EOD close above 1565 confirms a revised tp up to 1650, although historical resistance now approx 1585.

Potential turn noted for 20/4/17

[bookbroker] 11/4/2017 02:15

This stock has a heck of a load of gaps it will close at some point, if you believe in that theory, and barring a takeover at current levels!

[bookbroker] 11/4/2017 02:04

Half of these watering holes are subsidized by the producer to sell their mixers, this is a short on the basis that they would have to grow EPS by 100% pa for the next two years to justify that multiple!

[apad] 10/4/2017 14:09

Sog...
The hotel where I discovered what people were prepared to pay for tonic and so bought FEVR have switched to Fentimens!
"They made us a better offer - it's all about the bottom line"

apad

[bamboo2] 10/4/2017 09:26

Potential turn mid week, so no harm in a few down days.

[sogoesit] 10/4/2017 07:54

So, on a long weekend from last week I went to visit friends in Yorkshire & stopped over 3 or 4 times on the way. Out of 2 hotels & 4 restaurants only 2 had Fever Tree tonic. One hotel bar didn't even have Schhhhh and offered me Britvic!
What that says to me is that the UK market is still ripe for further penetration.
So, even without "dark spirits" lurking around I'm still optimistic about the tonic market. Let's just hope that's also realistic.
Anyway, I'll now bed my new ISA with FEVR & BOO & hope for good luck in the coming year.

[walbrock82] 07/4/2017 14:03

People should stop saying the reason why I shorted Fevertree is because there are cheaper, but similar version of the mixer.

If the people like Fevertree mixers they will buy it.

It's like saying APPLE has the best technological smartphone in the market (it clearly doesn't), but APPLE has a following and a brand that people gravitate to. Design, social proof, word of mouth contributes to why people would buy the product.

[walbrock82] 07/4/2017 10:03

There are reasons to think Fevertree is fair value, despite a ten bagger. See here: target='_blank' />

But, the share price looks fully priced in for this year, if the premium mixer were to repeat the same performance as last year.

[staverly] 07/4/2017 02:52

Interesting to note bullet point on p2 of recently released AR, which states (verbatim): "With strong growth prospects in all our four reporting geographies, ...". Coming off the back of 102% organic EPS growth with impressive operational gearing, bit of a head scratcher how sell-side equity analysts appear to be currently estimating less than 10% Y/Y EPS growth. It's not as though the business model is complicated, anything but. Thankfully, I stopped taking any notice of these market prognosticators a while back.

[bookbroker] 06/4/2017 19:15

Not much free stock avaliable, that's why it will rise on light volume, equally speaking this company is very vulnerable, interesting to know what percentage of sales each mixer contributes, one assumes standard tonic water the largest selling product, any hiccups and it'll fall ten per cent, no problem!