BellRing Brands (NYSE:BRBR) Posts Better-Than-Expected Sales In Q4, Provides Encouraging Full-Year Guidance

Jabin Bastian /
2023/11/20 5:16 pm EST

Nutrition products company Bellring Brands (NYSE:BRBR) beat analysts' expectations in Q4 FY2023, with revenue up 24.6% year on year to $472.6 million. Its full-year revenue guidance of $1.87 billion at the midpoint also came in slightly above analysts' estimates. Turning to EPS, BellRing Brands made a non-GAAP profit of $0.41 per share, improving from its profit of $0.25 per share in the same quarter last year.

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BellRing Brands (BRBR) Q4 FY2023 Highlights:

  • Revenue: $472.6 million vs analyst estimates of $460.8 million (2.6% beat)
  • EPS (non-GAAP): $0.41 vs analyst estimates of $0.40 (2.8% beat)
  • Management's revenue guidance for the upcoming financial year 2024 is $1.87 billion at the midpoint, in line with analyst expectations and implying 12.2% growth (vs 21.4% in FY2023)
  • Gross Margin (GAAP): 32.9%, up from 32.3% in the same quarter last year
  • Organic Revenue was up 24.6% year on year
  • Sales Volumes were up 19.4% year on year

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.

Personal Care

Personal care products include lotions, fragrances, shampoos, cosmetics, and nutritional supplements, among others. While these products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering. As with other consumer staples categories, personal care brands must exude quality and be priced optimally given the crowded competitive landscape. Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.

Sales Growth

BellRing Brands is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.

As you can see below, the company's annualized revenue growth rate of 19% over the last three years was excellent as consumers bought more of its products.

BellRing Brands Total Revenue

This quarter, BellRing Brands reported remarkable year-on-year revenue growth of 24.6%, and its $472.6 million in revenue topped Wall Street estimates by 2.6%. Looking ahead, analysts expect sales to grow 12.4% over the next 12 months.

Our recent pick has been a big winner, and the stock is up more than 2,000% since the IPO a decade ago. If you didn’t buy then, you have another chance today. The business is much less risky now than it was in the years after going public. The company is a clear market leader in a huge, growing $200 billion market. Its $7 billion of revenue only scratches the surface. Its products are mission critical. Virtually no customers ever left the company. You can find it on our platform for free.

Key Takeaways from BellRing Brands's Q4 Results

With a market capitalization of $5.96 billion, BellRing Brands is among smaller companies, but its $48.4 million cash balance and positive free cash flow over the last 12 months give us confidence that it has the resources needed to pursue a high-growth business strategy.

It was good to see BellRing Brands' top analysts' revenue, adjusted EBITDA, and EPS expectations this quarter. These results were driven by better-than-expected company-wide sales volumes and outperformance in its Premier Protein division. We were also glad its full-year revenue guidance beat Wall Street's estimates. On the other hand, its operating margin missed analysts' expectations, and it discontinued its PowerBar business, which is sad news for gym buffs. Zooming out, we think this was a decent quarter, showing that the company is staying on track. The stock is flat after reporting and currently trades at $45.6 per share.

So should you invest in BellRing Brands right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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The author has no position in any of the stocks mentioned in this report.