Alkaline Water Company (WTER) is an emerging water bottling company, manufacturing an enhanced type of water – alkaline water. The company promotes its product with the adage “the more alkaline water you drink, the healthier you are”.
Alkaline Water Company (WTER or “the Company”) has released two quarterly updates containing latest developments and financial performance for Q2-FY15 and Q3-FY15. The company is currently undergoing significant network distribution expansion and is implementing production capacity increase plans. The recent performances speak in favor of WTER which are also accompanied by record quarterly sales. Nevertheless, one must keep in mind the evolution of the Company and its forecast stock price are contingent on a number of risks (as previously mentioned) including: losses, stock dilution, need for additional financing, debatable health benefits of alkaline water, lack of product diversification, governance risks and tough competition.
Our valuation suggests a fair value of WTER’s stock of $0.27 per share, however the buy rating continues to be speculative because the Company has a weak financial position, ongoing funding needs and the Company still needs to break even.
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