Vita Coco (COCO)

Coconut water company The Vita Coco Company (NASDAQ:COCO) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 37.2% year on year to $182.3 million. Its GAAP profit of $0.40 per share was 35.9% above analysts’ consensus estimates.

Company Overview

Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ:COCO) offers coconut water products that are a natural way to quench thirst.

These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.

Competitors that offer coconut or other hydrating drinks include ZICO from Coca-Cola (NYSE:KO), ONE Coconut Water from PepsiCo (NASDAQ:PEP), and private companies Harmless Harvest and Naked Juice.

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $609.3 million in revenue over the past 12 months, Vita Coco is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. On the bright side, it can grow faster because it has a longer list of untapped store chains to sell into.

As you can see below, Vita Coco grew its sales at a solid 13% compounded annual growth rate over the last three years as consumers bought more of its products.

This quarter, Vita Coco reported wonderful year-on-year revenue growth of 37.2%, and its $182.3 million of revenue exceeded Wall Street’s estimates by 15.2%.

Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products will face some demand challenges. At least the company is tracking well in other measures of financial health.

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.

Vita Coco’s average quarterly volume growth of 10.8% 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.

In Vita Coco’s Q3 2025, sales volumes jumped 28.8% year on year. This result was an acceleration from its historical levels, certainly a positive signal.

Vita Coco has good unit economics for a consumer staples company, giving it the opportunity to invest in areas such as marketing and talent to stay competitive. As you can see below, it averaged an impressive 37.7% gross margin over the last two years. That means for every $100 in revenue, $62.27 went towards paying for raw materials, production of goods, transportation, and distribution.

Vita Coco produced a 37.7% gross profit margin in Q3, marking a 1.1 percentage point decrease from 38.8% in the same quarter last year. Vita Coco’s full-year margin has also been trending down over the past 12 months, decreasing by 3.9 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Operating margin is an important measure of profitability accounting for key expenses such as marketing and advertising, IT systems, wages, and other administrative costs.

Vita Coco has managed its cost base well over the last two years. It demonstrated solid profitability for a consumer staples business, producing an average operating margin of 13.7%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Vita Coco’s operating margin decreased by 2.6 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Vita Coco generated an operating margin profit margin of 15.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

In Q3, Vita Coco reported EPS of $0.40, up from $0.32 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Vita Coco’s full-year EPS of $1.15 to grow 8.2%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Vita Coco has shown robust cash profitability, driven by its attractive business model that enables it to reinvest or return capital to investors. The company’s free cash flow margin averaged 11.3% over the last two years, quite impressive for a consumer staples business.

Taking a step back, we can see that Vita Coco’s margin dropped by 5.9 percentage points over the last year. If its declines continue, it could signal increasing investment needs and capital intensity.

Vita Coco’s free cash flow clocked in at $35.65 million in Q3, equivalent to a 19.6% margin. This result was good as its margin was 12.9 percentage points higher than in the same quarter last year. Its cash profitability was also above its two-year level, and we hope the company can build on this trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Vita Coco’s five-year average ROIC was 43.3%, 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.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Vita Coco is a profitable, well-capitalized company with $203.7 million of cash and $5,000 of debt on its balance sheet. This $203.7 million net cash position is 8.5% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly Vita Coco blew past analysts’ EBITDA expectations this quarter and issued EBITDA guidance comfortably above Wall Street's estimates. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 8.9% to $46.05 immediately following the results.

Updated: December 4, 2025 at 9:47 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Vita Coco.

There’s plenty to admire about Vita Coco. To kick things off, its revenue growth was good over the last three years. And while its brand caters to a niche market, its volume growth has been in a league of its own. On top of that, its stellar ROIC suggests it has been a well-run company historically.

Vita Coco’s P/E ratio based on the next 12 months is 37.6x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in. Add this one to your watchlist and come back to it later.

Wall Street analysts have a consensus one-year price target of $55.44 on the company (compared to the current share price of $53.71).