AIM-listed mixer specialist says revenues will be 73% ahead of 2015 after another great year
Companies: Fevertree Drinks PLC
Premium tonics and mixer specialist Fevertree Drinks says its full-year results will be "materially" ahead of previous expectations after the firm recorded a sparkling second half of the year with sales continuing to grow and revenues c.73% ahead of 2015.
The Board of Fevertree says sales in the second half of 2016 were very strong, and as a result, it expects to beat 2015 by 75%, with full-year revenue around £102m.
The UK market performed "exceptionally" well in H2 with full year revenues from the UK expected to beat 2015 by 118%. Christmas is a big time of year for Fevertree, with the firm offering a range of gift items:
"Sales performance has been strong in both the On-Trade and Off-Trade channels, with particularly notable growth achieved over the Christmas period against a very strong prior year comparator."
Premium mixers are becoming increasingly popular in the UK, where Gin (and Tonic) is regarded as a national drink. Recent press has berated lower quality mixers as being unhealthy and affecting the flavour of spirits, reflecting a changing mindset amongst UK consumers.
Sales in Europe and the USA also performed well during H2, with the former beating 2015 by 39% and the latter expected to have increased 55% Yoy. Sales in the rest of the World grew a whopping 88%.
Whitman Howard reiterated its "Hold" rating of Fevertree. Whitman analyst Chris Wickham said it was a "sparkling" update, with Fevertree continuing to compound well in revenue and earnings growth:
"Our 1080p price target is based on a multiple of 45.0x the fully diluted 2017 EPS estimate which we had in place prior to this release. HOLD."
Whilst FEVR is trading at a hefty P/E multiple and Whitman's valuation is below its current level, Mr Wickham says there is a sizable addressable market for Fevertree, and as a result, the P/E ratio is "appropriate".
"These factors allow some headroom on expectations as well as implying that a sizable P/E ratio relative to peers continues to be appropriate."
Shares in Fevertree jumped 7% early on Tuesday, meaning the AIM-listed firm now has a huge market cap of £1.4bn and trades on a forward P/E of 79.78x. The stock has increased 92% in the past 12 months and is up more than 600% since its IPO in late 2014.
