Shareholders of BellRing Brands would probably like to forget the past six months even happened. The stock dropped 20.9% and now trades at $62.14. This might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for BRBR? Find out in our full research report, it’s free.
Why Is BellRing Brands a Good Business?
Spun out of Post Holdings in 2019, Bellring Brands (NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
1. Elevated Demand Drives Higher Sales Volumes
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
BellRing Brands’s average quarterly volume growth of 20.8% over the last two years has beaten the competition by a long shot. This is great because companies with significant volume growth are needles in a haystack in the stable consumer staples sector.
2. Outstanding Long-Term EPS Growth
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
BellRing Brands’s EPS grew at an astounding 28% compounded annual growth rate over the last three years, higher than its 18.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROIC Showcases Lucrative Growth Opportunities
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
BellRing Brands’s five-year average ROIC was 48.9%, placing it among the best consumer staples companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.
Final Judgment
These are just a few reasons why we think BellRing Brands is a high-quality business. After the recent drawdown, the stock trades at 26.1× forward P/E (or $62.14 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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