Key Points
- BellRing Brands produces protein shakes, energy bars, and powders under the PowerBar, Premier Protein, and Dymatize Brands.
- Consumers using GLP-1 weight loss medications such as Ozempic and Wegovy are increasingly turning to protein shakes and snacks to mitigate muscle loss while cutting caloric intake.
- This trend is boosting sales, profits, and stock prices for BellRing Brands, with shares rising 95% year-to-date (YTD).
- 5 stocks we like better than BellRing Brands
Sports nutrition company BellRing Brands Inc. NYSE: BRBR‘s stock has reached new all-time highs due to the increasing popularity of GLP-1 weight-loss medications. Although the company’s name may not be widely recognized, its products, including PowerBars, are commonly found in grocery stores, gyms, convenience stores, and health food stores.
Premier Protein drinks and Dymatize shakes are more familiar to athletes, but all of them share the common goal of providing protein for healthy snacking, energy, muscle growth, and recovery. BellRing was spun off from consumer packaged goods maker Post Holdings Inc. NYSE: POST, known for brands such as Pebbles, Peter Pan, and various pet food brands.
GLP-1 weight loss trend
The trend of using GLP-1 weight-loss medications has become widespread, with products like Ozempic and Wegovy from Novo Nordisk A/S NYSE: NVO flying off the shelves at pharmacies. Research by BellRing indicates that consumers using these medications tend to become heavy users of protein shakes, often using them as meal replacements to reduce total caloric intake.
BellRing CEO Davenport stated, “Products like Premier Protein are ideal because they provide delicious, high-protein nutrition in a compact size, giving individuals what they need without causing them to feel excessively full. Research also shows that once on the medication, consumers tend to exercise more and opt for healthier food and beverage choices, ultimately driving up the demand for convenient and sports nutrition products.”
Shift from donuts to protein snacks
Analysts have downgraded high-calorie, sugary snacks such as Krispy Kreme Inc. NASDAQ: DNUT and chocolate giant Hershey Co. NYSE: HSY due to the use of Ozempic. As donuts and candies become less popular, protein snacks are expected to become the new trend alongside the GLP-1 trend. BellRing’s sales figures support this notion.
Straightforward business approach
BellRing focuses on three main brands: PowerBar, a popular energy and protein bar for active individuals and athletes; Premier Protein shakes, which are high in protein and low in sugar and serve as a healthy drink or meal replacement; and Dymatize, a brand of protein powders and supplements designed to support muscle growth and recovery, including whey protein, casein, and creatine supplements. Check out the sector heatmap on MarketBeat.
Profits and growth surge
On November 20, 2023, BellRing announced its fiscal fourth-quarter 2023 results for the quarter ending in September 2023. The company reported an earnings-per-share (EPS) profit of 41 cents, surpassing analyst estimates of 40 cents. Adjusted EBITDA reached $98.5 million, with net earnings of $46.1 million. Revenues surged 24.6% year-over-year to $472.6 million, surpassing analyst estimates of $462.65 million.
In fiscal year 2023, net sales were $1.67 billion, with an operating profit of $287.3 million and net earnings of $165.5 million. Adjusted EBITDA reached $338.3 million, with the company generating $215.6 million in cash from operations.
Conservative guidance
For fiscal year 2024, BellRing expects net sales between $1.83 billion and $1.91 billion and adjusted EBITDA between $360 million and $390 million. These projections may be conservative.
Protein consumption driving growth
Premier Protein and Dymatize have seen significant increases in various key metrics. Premier Protein regained lost market share and points of distribution, with production growing by 17% year-over-year to meet the demand. The convenient nutrition category saw a 9% increase in fiscal Q4 2023 due to health, wellness, and fitness trends. Ready-to-drink (RTD) products led the category with 21% growth, while ready-to-mix (RTM) products grew by 11% year-over-year.
As a result, Premier Protein shake consumption accelerated by 36% in the quarter, maintaining its position as the leading brand in the RTD segment and reaching a 16% total household penetration. Dymatize also experienced a 36% year-over-year consumption growth in the quarter.
CEO’s Insights
Weekly breakout pattern
The weekly candlestick chart for BRBR illustrates an ascending triangle breakout, propelling shares to new all-time highs. The flat-top horizontal upper trendline formed at $41.55, while the ascending lower trendline formed at $35.47 in July 2023. The weekly relative strength index (RSI) rose through the overbought 70-band in August 2023, triggering the breakout as BRBR reached new all-time highs.
The daily market structure low (MSL) breakout occurred at the $49.18 trigger, with shares peaking at $51.35. The weekly RSI has remained in overbought territory for four months as it continues to climb to the 81-band. Support levels for potential pullbacks are at $44.37, $41.55, $37.03, and $35.47.
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