Company Overview
Reed's, Inc. operates within the consumer defensive sector, specifically focused on the beverages - non-alcoholic industry, by manufacturing and distributing natural beverages across a diverse international footprint that includes the United States, Canada, the United Kingdom, South Africa, the Caribbean, the European Union, and the Asia-Pacific region. The company's product portfolio features specialized offerings such as Reed's craft ginger beer, Reed's real ginger ales, Reed's classic mules, and additional varieties designed for global markets. This entity holds a market capitalization of $44.21M and reported annual revenue of $34.06M over the trailing twelve months, while the number of employees is not disclosed in available data. The relatively modest market cap and revenue figures indicate that Reed's, Inc. functions as a smaller-cap enterprise within the broader beverage landscape, suggesting a niche operational scale rather than dominance in the mass-market soft drink category.
Financial Health
Over the trailing twelve months, the company generated revenue of $34.06M, yet recorded a net income of -$15,847,000 and an EBITDA of -$14,988,000, highlighting a significant structural gap where operating expenses substantially exceeded total sales. The negative net income relative to revenue reveals a cost structure characterized by high overheads or operational inefficiencies that consume the entire revenue stream before reaching the bottom line. Furthermore, the free cash flow stands at -$11,959,000, indicating that the company is currently burning cash rather than generating liquidity, which limits its financial flexibility for capital expenditures or strategic acquisitions. Margin analysis shows a gross margin of 20.4%, suggesting that manufacturing and procurement costs consume the majority of the top line, while the operating margin of -46.9% and profit margin of -46.5% demonstrate severe operational losses that impact the final profitability. Regarding liquidity and leverage, the company holds $10.42M in cash against $10.03M in debt, resulting in a debt-to-equity ratio of 109.55, which signals a highly leveraged balance sheet where equity is insufficient to cover debt obligations. Despite the leverage, the current ratio of 1.60 indicates that the company possesses sufficient current assets to cover its short-term liabilities, providing a baseline level of short-term liquidity. Additionally, the return on equity is -200.5% and the return on assets is -39.1%, metrics that reveal management is currently destroying value rather than generating returns on the capital invested in the business.
Valuation Assessment
The valuation metrics present a complex picture, with a P/E Ratio (TTM) listed as N/A due to negative earnings, while the forward P/E is reported at -3.31, implying that the market expects earnings to remain negative in the immediate future or that valuation models are adjusting for anticipated losses. The price-to-book ratio stands at 4.88, which indicates that the market is pricing the stock at a significant premium relative to its tangible book value, a common occurrence for companies with intangible assets or speculative growth potential despite current losses. Alternative valuation measures such as the price-to-sales ratio of 1.30 and an EV/EBITDA of -2.27 suggest that investors are valuing the company based on sales revenue rather than profitability, as traditional earnings-based multiples are distorted by the negative income. In terms of trading range, the 52-week high is $12.00 and the 52-week low is $1.75, placing the stock's current valuation within a wide volatility band that reflects significant uncertainty regarding its future trajectory. The beta value of 0.64 suggests that the stock's price volatility is lower than that of the broader market, meaning it tends to move less drastically than the overall index during periods of market fluctuation.
Growth & Income
Revenue growth year-over-year has contracted by 23.1%, while earnings growth is N/A due to the absence of positive earnings in the current period, indicating that the company is shrinking in terms of top-line sales without the benefit of positive earnings growth to offset the decline. As a non-dividend payer with a dividend yield of N/A and a payout ratio of 0.0%, the company does not distribute cash to shareholders, implying that the firm retains its limited cash reserves for internal operations or debt service rather than funding growth through dividend payments. The overall growth and income profile is defined by negative revenue expansion and a complete absence of dividend income, characterizing the investment as a high-risk, non-income-generating asset within the consumer defensive sector. This profile suggests that the company is currently in a turnaround or distress phase where capital preservation is prioritized over distribution or expansion.