What Happened?
Shares of nutrition products company Bellring Brands (NYSE: BRBR) fell 33.3% in the afternoon session after the company reported disappointing third-quarter financial results and narrowed its fiscal year 2025 outlook. The sell-off appeared driven by concerns over retailer inventory levels. In May, BellRing first revealed that several key retailers decided to lower their on-hand supply of its nutritional products. This action created a significant headwind for third-quarter growth. Regardless, the quarter itself was fine as BRBR beat across the board (organic revenue growth, total revenue, and EBITDA). However, margins narrowed and EBITDA guidance for the full year fell below expectations. The stock's reaction suggests the market was expecting more given the underwhelming outlook.
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What Is The Market Telling Us
BellRing Brands’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for BellRing Brands and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 11.4% on the news that the company reported a "beat and raise" quarter. Second-quarter earnings results blew past analysts' gross margin expectations. Its organic revenue growth outperformed Wall Street's estimates, driven mainly by an 18.4% increase in volume. The results benefitted from strong demand for the Premium Protein brand as consumption growth of the product continued to accelerate during the quarter. Notably, management highlighted that "Dollar consumption of Premier Protein ready-to-drink ("RTD") shakes and Premier Protein powder products increased 9.6% and 43.6%." Overall, Premier Protein recorded a 19.8% sales growth. Looking ahead, management raised revenue guidance for the full year to $1.96-$2.00 billion (from $1.93-$1.99 billion) and Adjusted EBITDA to $430-$440 million (from $400-$420 million), suggesting that strong product demand is expected to continue in the second half of the year. Zooming out, this was a fantastic quarter that should have shareholders cheering.
BellRing Brands is down 51.6% since the beginning of the year, and at $36.14 per share, it is trading 54.5% below its 52-week high of $79.39 from January 2025. Investors who bought $1,000 worth of BellRing Brands’s shares 5 years ago would now be looking at an investment worth $1,746.
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