Why SodaStream Stock Rose 13.5% in March

MarketsMotley Fool

What happened

SodaStream (NASDAQ: SODA) beat the market last month by gaining 13.5% compared to a 3% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

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That boost added to a big rally for shareholders, who have seen their stock rise nearly 400% in the past three years.

So what

Investors pushed shares higher last month as they continued to digest SodaStream's latest operating trends. The at-home beverage maker announced an impressive growth spike back in February that also helped drive higher profit margins.

In a more detailed report filed in late March, SodaStream revealed other positive news about the business, including the fact that machine sales jumped 24% in 2017 to reach 3.7 million units, up from 2.9 million a year ago.

Now what

SodaStream is expecting overall sales growth to tick down to about 12% this year from 14% in 2017. However, investors have a few good reasons to expect significantly higher profits.

First, selling prices on its machines are rising thanks to innovative launches like a new one-touch machine hitting store shelves right now. Second, the company should start logging more high-margin carbon dioxide canister refill sales since these purchases tend to lag machine sales by a few months. That bright earnings outlook could support continued gains in the stock, assuming sales growth keeps meeting management's targets.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of SodaStream. The Motley Fool has a disclosure policy.