Fever-Tree Drinks (LSE: FEVR) is a U.K.-based beverage company that makes and distributes premium mixer drinks. These include products such as ginger beer, tonics, soda water, cola, and more. The Company sells these products to a variety of markets, including the U.K., Europe, and North America.
Per the company’s website, Fever-Trees co-founders Charles Rolls and Tim Warrillow were inspired to start the company in order to satisfy the growing demand for premium food and drink, including high-quality mixers.
Since Fever-Tree’s inception in the early 2000s, the company has grown to become a quite successful publicly-traded company, despite a slump in share price that began in 2018.
Fever-Tree outsources its production in order to prioritize flexibility and scalability. This model allows the company to maintain low capital expenditure requirements and an operating margin that outperforms the likes of Coca-Cola and Keurig Dr. Pepper.
Fever-Tree: Sales & Profitability Overview
Fever-Tree’s sales numbers are strong and have shown impressive year-over-year growth. In 2017, the company’s premium carbonated beverages accounted for £170.17 million in sales. This figure grew to £237.45 million in 2018.
Moreover, a cash-to-debt ratio of 71.28, an equity-to-asset ratio of 0.87, and a debt-to-equity ratio of 0.01 indicate that the company’s financials are strong.
Regarding profitability, Fever-Tree’s operating margin is 27.72% and shows continued growth. The company’s 5-year average operating margin growth rate was 3.20% per year. Fever-Tree also ranked higher than the majority of companies in its industry with a net margin of 22.46%.
There is also potential for the company to expand greatly overseas, which would be significant in aiding the company’s long-term growth and sustainability.
When evaluating the growth potential of a company, it can be helpful to know which notable institutional investors have taken a stake in said company.
Lindsell Train Ltd. took a 5.25% stake in Fever-Tree earlier this year. Lindsell utilizes a high-concentration approach when building its portfolio — meaning its position in Fever-Tree can be seen as a significant endorsement.
Other notable institutional shareholders include Morgan Stanley Investment Management Ltd. with 3.43%, Schroder Investment Management Ltd. with 5.30%, Fidelity Management & Research Co. with 4.99%, and Standard Life Investments Ltd. with 4.60%.
Article By: Connor Beam