The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Vita Coco (NASDAQ:COCO) and the rest of the beverages, alcohol, and tobacco stocks fared in Q3.
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
The 13 beverages, alcohol, and tobacco stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 2.7% below.
Luckily, beverages, alcohol, and tobacco stocks have performed well with share prices up 11% on average since the latest earnings results.
Vita Coco (NASDAQ:COCO)
Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ:COCO) offers coconut water products that are a natural way to quench thirst.
Vita Coco reported revenues of $132.9 million, down 3.7% year on year. This print fell short of analysts’ expectations by 4.3%, but it was still a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.
Martin Roper, the Company’s Chief Executive Officer, said, “Our sales performance in the quarter was affected by our inventory flow, which was lower than we had planned due to the difficulty in obtaining ocean freight containers that started in the second quarter. We are pleased that we have weathered these shortages and, in late September, saw our product flow and availability in market improving. Based on continued strong category growth and improved inventory levels, we are raising our full year guidance for net sales and adjusted EBITDA."
Interestingly, the stock is up 11.1% since reporting and currently trades at $34.20.
Is now the time to buy Vita Coco? Access our full analysis of the earnings results here, it’s free.
Best Q3: Zevia (NYSE:ZVIA)
With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.
Zevia reported revenues of $36.37 million, down 15.6% year on year, falling short of analysts’ expectations by 6.8%. However, the business still had a strong quarter with EBITDA guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 269% since reporting. It currently trades at $4.00.
Is now the time to buy Zevia? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: Celsius (NASDAQ:CELH)
With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.
Celsius reported revenues of $265.7 million, down 30.9% year on year, falling short of analysts’ expectations by 0.7%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
Celsius delivered the slowest revenue growth in the group. As expected, the stock is down 13.9% since the results and currently trades at $27.34.
Read our full analysis of Celsius’s results here.
Constellation Brands (NYSE:STZ)
With a presence in more than 100 countries, Constellation Brands (NYSE:STZ) is a globally renowned producer and marketer of beer, wine, and spirits.
Constellation Brands reported revenues of $2.46 billion, flat year on year. This number lagged analysts' expectations by 2.8%. Overall, it was a slower quarter as it also produced a miss of analysts’ organic revenue and adjusted operating income estimates.
The stock is down 14.5% since reporting and currently trades at $187.42.
Read our full, actionable report on Constellation Brands here, it’s free.
Boston Beer (NYSE:SAM)
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.
Boston Beer reported revenues of $605.5 million, flat year on year. This print surpassed analysts’ expectations by 0.7%. Aside from that, it was a satisfactory quarter as it also produced a solid beat of analysts’ EBITDA estimates.
The stock is down 8.9% since reporting and currently trades at $274.99.
Read our full, actionable report on Boston Beer here, it’s free.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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