New Age Beverages Corp (NASDAQ:NBEV) A Break Out Play On Improving Fundamentals
A sell-off wave that had gripped New Age Beverages Corp (NASDAQ:NBEV) is slowly losing its momentum. The stock is showing signs of bottoming out as the upward momentum continues to gather pace. The trigger behind the recent upswing is a stellar financial report that has once again reaffirmed the company’s growth prospects. The stock has bounced back from the $3.20 mark, which appears to be a critical support level. A 30% spike in recent weeks at the back of high turnover in traded shares affirms renewed investor interest in the stock. New Age Beverages faces immediate resistance at the $4.80 mark on further movements on the upside. A rally followed by a close above the critical resistance level should open the door for bulls to push the stock to the $6 a share handle. The stock looks set to continue powering high on strengthening investor’s sentiments on the management reaffirming the company’s growth metrics. Stellar financial results also attest to the fact that the company is in a phase of rapid growth.
Strengthening Balance Sheet
For the three months, ended September 30, 2018, the company reported revenues of $15.3 million compared to $16.8 million reported a year earlier. According to the Chief Executive Officer, Brent Willis, the company strengthened its balance sheet and cash position in the quarter.
For starters, New Age Beverages completed an $11.8 million underwritten offering giving it the financial muscle to pursue growth opportunities. Besides, the company eliminated all its toxic debt and purchased additional inventor.
Proceeds from the underwritten offering also allowed the company to replenish its inventory levels. With a replenished inventory the company remains well positioned for a solid fourth quarter. The company also secured a $12 million line of credit further strengthening its cash position.
“Now, with the distribution breadth of our core brands and our ability to fulfill demand, the impending launch of our CBD portfolio, and next steps with strategic growth opportunities, we are confident in our ability to continue to drive excellent return for shareowners,” said Mr. Willis.
Organic Growth Push
The company’s cash balance increased to $28 million from 285,000 as the value of its total asset soared to $100 million. The strengthened financial position means the company is well positioned to become a leading healthy beverage company. The company also remains well financed to pursue acquisitions that have the potential to drive organic growth and new CBD portfolio. New Age Beverages has also completed a previously announced underwritten public offering whereby it issued 12.9 million shares at a price of $3.50. The company estimates net proceeds of about $49 million after deduction of underwriting discounts and other expense. Initial indication is that the funds will go towards financing potential acquisitions that the company hopes will accelerate organic growth. According to the Chief Financial Officer, New Age Beverages is for the first time in a position to scale to profitability. The strength of the brand portfolio as well as the quality of the management team according to the executive points to a brighter future as well as well as real value for shareholders.
New Age Beverages is down by more than 50% from highs recorded in October. While the underperformance is a point of concern things are starting to look up. For starters, the stock has begun climbing high on improving underlying fundamentals. Renewed investor interest comes on most of them taking note of the company’s strengthened balance sheet, the key to pursuing organic growth. The stock looks set to continue climbing high as the emerging uptrend continues to gather pace.
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