Let’s attempt to view the situation from CEO Nick Caporella’s perspective. It is a given that the company has been a large part of his career and has been massively stamped by his personality and talents. Every analyst or investor who follows this company is aware of this fact. In this personal that sense, it would undoubtedly be hard to let go of. On the other hand, Caporella is now around 77 years old. At some point a premium valuation might be hard to pass up, as I think he has always thought like an investor (which is one reason why he has been a good CEO). Like any person, he will be considering what the best use of his time will be, given his age and station in life. Is it at National Beverage, or something else? We can’t know what else is on Caporella’s horizon, but for the market to ignore the acquisition value and upside optionality imbedded in this stock is not illogical.
Now to the second question: should “controlled” companies always trade at a discount? Absolutely not! Track record matters. Caporella and his team at National Beverage Corp. (NASDAQ:FIZZ) have quietly created an approximately 18% compounded return to investors over the past 20 years. This is one of the best long-term track records in the entire stock market. If anything, National Beverage should trade at a valuation premium due to its outstanding record of creating shareholder value.
The recent breakout and 15% gain still leave National Beverage’s stock substantially undervalued. I am adjusting my price target upwards to $22 per share, which amounts to a 37% gain from recent price levels.
The article National Beverage Is Breaking Out originally appeared on Fool.com and is written by Nat Stewart.
Nat Stewart has a position in National Beverage. The Motley Fool has no position in any of the stocks mentioned. Nat is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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