Fevertree Drinks Share Discussion Threads

[sogoesit] 03/2/2017 13:48

Thanks for feed-back, investorchamp.

I take issue with your statement that analysts forecasts are worthless although I understand your sentiment. The future is not forecastable and forecasts are unlikely to be right. If they do turn out to be right it is more a matter of luck.

However, forecasts, and the numbers attached are information in the market place. They are therefore subject to market players' judgement which can be agreed upon, disagreed or ignored. In short they can be the basis for expectation.
In my view gauging one's own view (expectation) against one's own perception of the market view (market expectation) is critical to arbitrage and thereby profit.

Until prior to the latest trading update EPS forecasts were in the range of 20p for fiscal 2016. Following the update those forecasts have now changed to 23p for 2016, 25p for 2017 and 27p for 2018.
Given the guesstimating about i) growth in revenue, ii) EPS (operational gearing, and iii) the price investors will pay for that growth (P/E) it is almost guaranteed that a forecast will be wrong... but here we are discussing our own estimates!! I.e. we are generating our own expectations!

For example, I agree with your "reasonable" 2017 revenue of about £140m (I think closer £150m) but disagree your EPS. I am guessing EPS for 2016 to be more than 25'ish. and then 2017 of about 33p.
To me, paying 40x EPS that means 1320p now is "fair value" for the current year's earnings. If I put a cushion of upside expectation on this I would buy upto 1650p for two year's hence.
That seems achievable to me... excluding a "tipping point", competition issues or a premium for takeover or sale.

[staverly] 03/2/2017 13:41

Investorschampion ... of course the 26p 2017 EPS is ridiculous, my point was that the FY16e can now be taken seriously as it was made post year end trading update. FWIW, a year ago to the day the FY16 EPS forecast was 14p, having been increased from 12.9p following the usual January "profits warning" (in 2016). So that 14p is now 24.2p.

Sogoesit ... Cenkos are expecting 24.2p for FY16. I haven't seen the source doc but noted that my data provider recently removed all FEVR estimates. Hence my interest when they reappeared due to Cenkos's revised numbers. As IC has pointed out, the current FY17 numbers are anomalous. FWIW, IMO ditto IC's detailed in post above! LTIP doesn't kick in until 2018 thereby FY17 dilution likely to be minimal, corollary being that EPS growth (next year) conservatively around 60%, giving a PE in the early thirties. Hardly expensive, methinks. DYOR

[sogoesit] 03/2/2017 09:25

nice post staverly.
What does Cenkos, or you, forecast EPS will be for 2016 and 2017 given the operational gearing effect?
From posts here we were, if I recall, assuming around 20-22 for 2016.

[staverly] 02/2/2017 22:11

Mr Market is still playing catch up, methinks. Of course, it is purely subjective, however my reasoning is summarised as follows:

We’ve known since 24 January that their sales for year ended December 2016 were £102m. We can now see what SSEA are pencilling in vis-à-vis bottom line. If Cenkos’s recently revised numbers are to be trusted, which in the chronological scheme of things, they should be, then the operational gearing acceleration is impressive to say the least. Sales +73%, PBT + 110%, EPS + 109% (marginal dilution).

The likely huge increase in ROCI (FY15 around 20%, FY16 I estimate around mid thirties*) strongly suggests that the business is just starting to hit its stride. A sizeable competitive advantage, high barriers to entry, minimal reinvestment requirements, outstanding cash conversion,sound management (owner drivers with modest remuneration), i could go on, collectively suggest to me that this stock is just warming up. From a relative standpoint, i would conservatively think it has to be currently worth 30% more than Boohoo.


Disclosure: key holding


*PAT: 27.8m Average capital base 83m

[wetdream] 02/2/2017 08:55

Not a holder, but love their products!
Like their strategy-but can't believe the mkt valuation.
Probably plenty of momentum to go, as the £13 share price has probably put off the real gamblers.
Good luck all.

[sogoesit] 02/2/2017 08:23

Accumulated a small amount today; feel a bit scary at these valuations now!
Momentum is now with the share price so being on the bandwagon is better than not.
Good luck

[martywidget] 02/2/2017 06:02

Drinks International Annual Bar Report: Tonic Water
01 February, 2017
There’s one brand that gets bar-called more than any other tonic, says Hamish Smith
The tonic gun has long been holstered in the world’s top bars – here, tonic comes in small premium bottles. More likely than any other to come out of the fridge, says our poll of 100 bars, is Fever-Tree....

[bamboo2] 31/1/2017 17:24

Sogo, I've been lucky enough to put the cash into other good risers!

Gla

[sogoesit] 31/1/2017 10:39

Well, your charts warned you... ;-)
1325p is next target now that 1250'ish has been achieved.
Good luck.

[apad] 30/1/2017 13:14

Just put VLG in the epic box, N.
apad

[sogoesit] 30/1/2017 12:57

Thanks for update.
Yes, Fever-Tree attracts comment. Most recent one I had was during a phone call with a broker who said their family drink the tonic (with quinine) because it helps to alleviate muscle cramps. I didn't dissuade her on the effects, whether true or not, but shows the pervasiveness of the name and market reach!
I make a regular trip to a distant supermarket to buy my Madagascan Cola. Hopefully, it will appear in a nearer supermarket soon! ;-)

[neurolodger] 30/1/2017 12:43

APADWhat is VLG board - sorry for my ignorance

[martywidget] 30/1/2017 12:32

Fever-Tree is branching out as it finds there's more room to grow

[apad] 26/1/2017 16:26

s
Check out previous postings on VLG board.
apad

[saturn5] 26/1/2017 15:24

APAD

what else have you got in your portfolio

I know I should have got in FEVR months ago

Now its a bit late

I am now following Brainjuicer BJU

[jerseymike] 26/1/2017 15:15

The problem in America is that it doesn't understand Fevertree yet. Our local grocery store, Publix, only stocks very small amounts of the Tonic, Tonic Light, and Ginger Beer, and is often out of one or more item. They haven't heard of Elderflower or Mediterranean. The company needs to do more education of Liquor and Grocery Store buyers. We, like the previous poster wrote, buy our FT products in bulk from Amazon. Great packaging and fast delivery service. But consumers need to know/learn how good it is before they will buy. Over to you FT - get the Americans educated about your product.

[sogoesit] 26/1/2017 09:39

Broker updates:
24 Jan - Investec - TP - 1300
26 Jan - Berenberg - TP - 1325
26 Jan - Whitman Howard - 1250

[sogoesit] 26/1/2017 09:23

Too early imv.
But that kind of speculation underpins the share price
Good probability that they will sell-out eventually; one of the principals has before in another business.

[finbarot] 26/1/2017 08:50

Any views on this being taken over by Coke Diaggio etc??

[martywidget] 25/1/2017 06:45

Small Cap Value Report (24 Jan 2017) - SPRP, FEVR, EMR, PZC





From the article - "Checking back on my notes on Fevertree, I gave it a neutral rating last July, when the shares were 839p. The shares are up 42% since then, in just six months - so I obviously missed something! To be fair, management missed it too - as results are beating their own forecasts."


LOL!!

[apad] 24/1/2017 16:40

Now in our local COOP!

Blackrock top-sliced.
apad

[hybrasil] 24/1/2017 12:58

In Florida on holiday. We were asked out to drinks by a lovely retired merchant banker. In his house the only tonic was fevertree. They buy it by the caseload from amazon

[apad] 24/1/2017 12:15

TT have a look at the advert for Cola to satisfy the Rum&Coke market in the UK. It is amazing.
USA is a huge market and from a relatively small base the opportunity for growth should be much easier than in the UK.
I'm not sure what currency effects are contained in these numbers, either.
FEVR is a global market brand play, so, yes, I'm disappointed in the USA growth rate - not just by comparison with the UK.
UK growth rate will plateau soonest.
FEVR is 17% of my portfolio (largest holding), so I am always looking for problems, however small, and well hidden under headlines.
apad