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National Beverage Corp FIZZ

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Morningstar’s Analysis

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Fundamentals Remain Strong at National Beverage; Shares Still a Bit Heated Following Short-Squeeze

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.

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Company Profile

Business Description

National Beverage is one of the top 10 non-alcoholic beverage companies in the U.S. Its portfolio skews toward functional drinks (i.e. those purporting to offer health benefits) and is anchored by the popular LaCroix sparkling water trademark. Other offerings include Rip It energy drinks, Everfresh juices, and soda brands like Shasta and Faygo. The firm controls most of its production and distribution apparatus, with very little outsourcing. In terms of go-to-market, it uses warehouse distribution for big-box retailers, direct-store-delivery for convenience stores and other small outlets, and food-service distributors for the food-service channel (schools, hospitals, restaurants). It is controlled by chairman and CEO Nick Caporella, who owns over 73% of the common stock.

8100 SW Tenth Street, Suite 4000
Fort Lauderdale, FL, 33324
T +1 954 581-0922
Sector Consumer Defensive
Industry Beverages - Non-Alcoholic
Most Recent Earnings Jan 31, 2021
Fiscal Year End May 2, 2021
Stock Type Slow Growth
Employees 1,550