Shares of Vita Coco (COCO 2.36%) were climbing again today after the leading coconut water company posted another round of strong results in its third-quarter earnings report as profit margins surged again.
As a result, the stock was up 12.8% as of 12:33 p.m. ET.
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Vita Coco does it again
Revenue in the third quarter rose 11% to $138.1 million, which essentially matched estimates at $138.3 million. The company also delivered a healthy improvement in gross margin, jumping from 26% in the quarter a year ago to 41%, due to lower transportation costs and higher Vita Coco pricing.
As a result, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped from $12 million to $27 million, and earnings per share doubled from $0.13 to $0.26, topping the analyst consensus at $0.24.
CEO Martin Roper said: "We are extremely pleased with this quarter's results with 11% net sales growth and Adjusted EBITDA of $27 million. Gross margins for the quarter exceeded our expectations due to better than expected price realization across our business, and the stabilization of our transportation costs."
NASDAQ: COCO
Key Data Points
The guidance is even better
Vita Coco also raised its guidance, calling for revenue growth of 13% to 15%, compared to previous guidance of 10% to 12% growth, due to mid-teens growth in the Vita Coco brand growth and strength in its private label channel. It also said it now expected to retain the majority of business from a key customer that it was set to lose.
On the bottom line, adjusted EBITDA projections rose from $56 million-$60 million to $64 million-$67 million, showing the increased revenue will flow through to the bottom line.
Vita Coco is the rare member of the 2021 initial public offering (IPO) class that has emerged as a winner in a difficult environment for consumer stocks. Shares have now nearly doubled from their $15 IPO price. The company is executing well and outperforming expectations, and it's penetrating a large addressable market with a healthy, on-trend beverage.
Gross margin won't ramp up forever, but the beverage stock still looks reasonably priced for its growth potential.
