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Fevertree's growth streak continues

Shares in the beverage specialist initially stumbled on results day before finishing higher
March 21, 2017

It's funny how consistent outperformance can end up working against you. Alternative Investment Market (Aim) darling Fevertree (FEVR) suffered an immediate share price drop on the morning these results were released, despite reporting a surge in group sales and near-doubling in adjusted cash profits. The gearing effect of higher sales more than offset increased investment in recruitment, systems and marketing, allowing the cash profit margin to widen from 30.7 per cent to 35.1 per cent. The shares soon recovered ground.

IC TIP: Hold at 1400p

Chief executive Tim Warrillow called 2016 an "exceptional year" as the company saw growth across all geographies, flavours and formats. Admittedly, the fact that Fevertree now counts itself as a UK exporter, generating more than half its revenues overseas, meant profitability was lifted by foreign exchange rates and the relative weakness in sterling. But, even so, a 118 per cent leap in UK revenues - its most mature market - shouldn't be sniffed at. Mr Warrillow says there's "still a way to go" on home soil, as the premium spirits market gains traction with millennial consumers.

Analysts at Shore Capital expect adjusted pre-tax profits of £38.1m for the year ending December 2017, giving EPS of 26.8p (from £34.8m and 24.7p in 2016).

FEVERTREE DRINKS (FEVR)

ORD PRICE:1,400pMARKET VALUE:£1.61bn
TOUCH:1,400-1,405p12-MONTH HIGH:1,541pLOW: 592p
DIVIDEND YIELD:0.4%PE RATIO:59
NET ASSET VALUE:77p*NET CASH:£26.9m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2012**16.23.6nanil
2013†20.6-1.4-3.1nil
201434.72.51.50.30
201559.316.811.63.08
201610234.323.96.25
% change+73+105+106+103

Ex-div: 20 Apr

Payment: 26 May

*Includes intangible assets of £43m, or 37p a share

**Pre-IPO figures

†Trading period from 7 Mar 2013 following Feb 2013 IPO