Being that I am so close to BeBevCo (OTC Markets: BBDA) in that we conduct investor relations, investor communications, website design and maintenance, I have been looking at other beverage industry companies lately. Working within BeBevCo, I have learned a considerable amount regarding the beverage business over the last 10 months or so.
Looking at the beverage business as a whole, I am particularly interested in specialty drinks. I like energy drinks. BeBevCo’s Potencia is a great alternative to the rocket fuel offered by Coca Cola’s (NYSE: KO) Full Throttle or Monster Beverage Corporation’s (NASDAQGS: MNST) Monster Energy Drink.
Of much more use to me is a relaxation drink. Being in business with a million things to keep track of and a thousand problems and issues to work through daily, it is hard for me to shut my brain down. I started consuming Koma Unwind relaxation drinks which I pick up from BeBevCo every couple of weeks. And, in the last couple of months, I have been grabbing the new Relax 5 shots. Both of these products work great and have enabled me to get a good night’s sleep!
But first let’s look at what Bloomberg’s article said:
After MNST more than doubled in the last year, Monster Beverage was valued last week at 20 times earnings before interest, taxes, depreciation and amortization, the priciest of any North American soft-drink maker greater than $500 million, according to data compiled by Bloomberg that includes net debt. The $10.4 billion company, which got its start selling juices in the 1930s, has the highest operating margins in the industry and is projected to boost earnings 70 percent in the next three years, analysts’ estimates compiled by Bloomberg show.
OK, so if I do my math right (using MNST as a benchmark), with BeBevCo earnings at $229K for 2011, that puts the stock valuation at .00458. The stock is trading at .0008. So, all things being equal, MNST’s valuation is 5.725 times BeBevCo’s. BeBevCo is trading at less than 3 times earnings.
MNST stock is currently trading at 39 times earnings. If BeBevCo’s stock was trading at 39 times earnings it would be trading at just over penny.
At 20 times earnings, BeBevCo’s valuation is $4,584,540. However, BeBevCo’s current valuation is only $676,800 (20 X .0008 / 846M shares outstanding). In summary, fair valuation for BeBevCo is .0046. That number is a long way from the .0008 they stand at today. So, there is plenty of room for growth with regard to marketplace valuation.