NATIONAL BEVERAGE CORP (FIZZ) stock intrinsic value fair value estimate & owner earnings analysis

National Beverage sells what it calls Power+ Brands: LaCroix sparkling waters, Clear Fruit flavored waters, Rip It energy drinks, and Everfresh and Mr. Pure juices. It also sells carbonated soft drinks such as Shasta and Faygo, regional brands with more than 100 years of history. Substantially all sales are in the United States, made in its own plants near major metro areas. It had no borrowings at fiscal year-end, keeps its unsecured bank credit lines undrawn, and returns surplus cash through occasional special dividends ($3.25 a share paid in July 2024 and again in July 2026, about $304 million each time). Chairman Nick A. Caporella controls the company, and the company pays a management fee to his firm, CMA (about $11.8 million in fiscal 2026). That fee is already deducted in the earnings below. Earnings power. We measure the cash the business produces for its owners: operating cash flow with working-capital swings removed, less the capital spending needed to keep the plants running. Spending that supported revenue growth is not deducted. Stock compensation is negligible. On that basis, owner earnings rose from $1.18 a share in fiscal 2017 to $1.99 in fiscal 2026 (year ended May 2, 2026). Along the way there were two clear troughs. In fiscal 2019-2020, LaCroix sales cooled and costs rose, and owner earnings were about $1.30. In fiscal 2023, packaging and ingredient inflation pulled them down to $1.47. Part of recent earnings is interest on the large cash balance that builds up between special dividends (about $10.6 million in fiscal 2026). We took that interest out of earnings and credited the cash itself instead, so it is not counted twice. On this operating basis, the full cycle from fiscal 2019 to 2026 has a median of $1.69 a share (about $158 million a year), and that is our starting level. It is well below fiscal 2026's $1.90 operating figure on purpose: fiscal 2026 benefited from lower capital spending, while net income actually slipped. Recent trend. In fiscal 2026, case volume fell 6.7% and average price per case rose 5.2%, so sales slipped 1.7% to $1,180.6 million (partly because the year had one less week). Gross margin held at 37.0%. In the first quarter of fiscal 2027 (to August 1, 2026), sales were flat at $330.7 million, but gross margin dropped to about 35% from 38% and operating income fell 17% to $58.5 million. Owner earnings grew about 8.5% in fiscal 2026, yet the base case assumes a 3% decline in year one from the already-lower starting level. That reflects the volume decline and the first-quarter cost squeeze. A single weak quarter is not enough to lower the starting level itself. Base case ($30.98): Earnings start at $1.69, dip 3% in year one, then grow 1.5% a year through year ten. That growth comes from price increases and does not assume any volume growth. Sales grew about 2% a year from fiscal 2019 to 2026, carried by price increases, even though volume fell 6.7% in fiscal 2026 alone. After year ten we hold earnings flat with no growth. The soft-drink brands have more than a century of consumer loyalty, and the plant network serves substantially all US metro markets, so we assume earnings persist but give no growth credit beyond what is evidenced. The business is worth about $2.8 billion ($30.27 a share). It owes nothing and holds about $67 million of cash beyond operating needs ($0.72 a share; $107 million on hand after the July 2026 dividend), for $30.98 a share. Bear case ($16.64): Earnings fall back to the fiscal 2019-2020 trough of about $1.30. Can and ingredient costs keep rising (the company hedged only $129.7 million of aluminum at fiscal year-end, and first-quarter margins are already under pressure). Volume keeps declining at a pace that price increases only partly offset. Earnings then erode 2% a year indefinitely as LaCroix loses ground to rival sparkling waters and private label. The case also reflects key-person and succession risk from the chairman's long control. The business is worth about $1.5 billion ($15.92 a share); with no debt and $0.72 of surplus cash, that is $16.64 a share. Bull case ($47.88): Earnings recover to around $1.85, close to the fiscal 2024-2026 run rate, and grow 3% a year for ten years as pricing keeps pace with costs and volume stabilizes. That rate is half the roughly 6% a year that owner earnings per share actually compounded from fiscal 2017 to 2026, through two cost downturns. After year ten, earnings grow 1.5% a year from continued price increases. The business is worth about $4.4 billion ($47.17 a share); adding surplus cash gives $47.88. Compared with our previous estimate ($29.11 base case), the value is slightly higher. We now apply a single 6% required return to every company and charge risk only through the cases, which raises the value. We also start from a lower earnings level ($1.69 instead of about $1.75), assume slower growth, and no longer count interest earned on the cash pile as business earnings. Those changes lower the value and mostly offset the first. What we left out: new products and any rebound in the sparkling-water category, because neither is evidenced. We also give no value to future special dividends beyond the earnings that fund them. What would make this wrong: a faster volume decline in LaCroix, a lasting step-up in aluminum can costs that pricing cannot recover, or a change in control or capital allocation when leadership changes. On the other side, margins could rebound to the 37-38% gross margin range as cost pressures ease. Accounting notes: Lease costs are treated as ongoing operating costs, not as a non-cash item to add back. Share counts before fiscal 2021 are adjusted for the 2-for-1 stock split. The fiscal 2017 and 2018 diluted share counts are derived from reported earnings per share. In a few years, the individual working-capital lines differ from the totals by about 1-2%, which we could not fully trace. This does not change the conclusion.