Analyst Note| Nicholas Johnson, CFA |
In the months leading up to narrow-moat National Beverage’s third-quarter earnings print, the stock was a clear beneficiary of the short-squeeze momentum that left the entire investment community agape. Nevertheless, with the mania cooling off, and fundamentals coming back into focus, the firm delivered strong results that exceeded our expectations in terms of both revenue and profits. We plan to raise our fair value estimate to $48.50 from $44.50 to reflect time value since our last update, as well as the better-than-expect commercial execution and margin delivery thus far this year. Ultimately, while we’re not vociferously bearish on the stock, we still view it as overvalued at current levels. For investors seeking soft drink exposure, we see compelling margins of safety and more enduring competitive advantages in wide moats Coke and PepsiCo.