Fevertree: Can US growth drive prove the tonic for investors?
Fevertree is hoping a US growth drive will prove a tonic for investors this week as the mixing giant prepares to update the City on its performance to start the year.
Shares in the London-listed firm have surged some 36 per cent over the past 12 months despite jitters over whether it could ramp up its bottling capacity to meet demand.
Investors will be keen to see whether bosses have ironed out its supply issues and whether the firm has been able to widen margins after a cost cutting drive over the past year when it updates the City on Tuesday.
City analysts have predicted its pre-tax profit margins will take a dip despite the cost-cutting measures. Analysts are pricing in pre-tax profits of £7.7m and full year profits of £28.7m. The firm made £31m last year.
Hargreaves Lansdown analyst Matt Britzman said the City would be scoping out the success of its international growth plans and whether it could justify its hefty valuation.
“First and foremost is overseas expansion, specifically in the US, arguably the main reason for the high growth valuation,” he said in a note.
“Delays ramping up bottling production last year meant the group relied on shipping to serve US customers, leaving it at the mercy of inflated freight costs and port congestion.
“With signals earlier in the year suggesting issues have been ironed out, investors would like to see some benefits feeding through to the bottom line.”
Profit margins would also be under the microscope, he added, with cost-cutting exercises “expected to yield some results as we move through the year”.
Fevertree floated in 2014 and has weathered a tricky time on the public markets in the past two years. Shares have rebounded this year but are trading down over 50 per cent since the beginning of 2022.