By Teresa Rivas

Sun, sand, and coconuts probably sound good to many winter-weary Americans right now. Buying Vita Coco's stock dip might be the next best thing.

Vita Coco said Wednesday it earned nine cents per share in its fourth quarter, on revenue that climbed 0.4% year over year to $127.79 million. Analysts were looking for per-share earnings of 13 cents and revenue of $121.4 million.

For the full year, it expects revenue of $680 million to $700 million, with a midpoint above the $685.4 million consensus. It sees gross margins coming in around 38%, helped by lower tariffs and higher pricing.

Vita Coco shares initially traded higher on the report before falling on Wednesday. It's a good buying opportunity for a company that has tapped into America's changing drinking habits.

While much has been made about younger generations drinking less alcohol -- sales fell to a record low in 2025 -- Americans are avoiding more than just booze. Even before the pandemic, bottled water had overtaken soda as the nation's most popular beverage by volume after years of decline for carbonated soft drinks -- a category where demand remains lumpy.

By contrast, sales of coconut water have been growing by double digits in percent terms in recent years, as Americans flock to healthier alternatives -- a boon to industry leader Vita Coco. Nielsen data showed that retail sales were up some 25% over the past year through early February.

"Coconut water category demand remains healthy, and we continue to believe in our thesis that Vita Coco can grow with the category through investments that help drive household penetration and consumption occasions," William Blair analyst Jon Andersen wrote.

He is concerned about the company's valuation: The stock changing hands around 30 times 2027 earnings might look rich at first glance. However that figure is easily below Vita Coco's five-year average of more than 40 times, and looks more palatable considering the company's earnings growth. Consensus calls for per-share earnings to jump nearly 28% this year to $1.52, and almost 19% again next year to $1.81.

The company's growth is even more valuable "given the scarcity of strong growth narratives across the consumer staples group right now," notes Stephens analyst Jim Salera. He recently had a $65 price target on the shares, more than 20% above where the stock currently trades.

There was a lot to like in Wednesday's report as well. Vita Coco's geographically diverse footprint of factories means it has been able to shift production to lower its exposure to tariffs.

In fact, the company cited a lower tariff burden and higher prices in its full-year gross margin forecast. While that could be somewhat offset by product mix and promotions, Vita Coca is still guiding for gross margins to come in at 38%, above its five-year average of 32% and the fourth-quarter's 35%.

The company also saw momentum in its relatively new Vita Coco Treats category, which includes flavors like strawberries and cream, cherry vanilla, and lemonade. That speaks to the company's ability to expand successfully beyond its core product, as its growth outlook incorporates new product lines like Treats and protein beverage PWR LIFT.

Although the stock traded lower following the report, it still has climbed some 30% since the Barron's Investor Circle highlighted it in November, and much of that thesis will continue to play out as it continues to win market share in the U.S. and abroad.

Vita Coco has been on a roll, and will be again soon.

Write to Teresa Rivas at teresa.rivas@barrons.com

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(END) Dow Jones Newswires

February 21, 2026 09:29 ET (14:29 GMT)

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