With beverage industry revenue multiples averaging roughly 6.5X gross sales, and as high as 9.5X, consider Splash Beverage Group, Inc. (NYSE American: SBEV) stock a gift at current levels. In fact, its revenue guidance published Monday shows that this stock, at a minimum, should be pricing north of $4.00 per share. And that's only at the mid-range of industry models.

In a more appropriate example, based on its ascending growth curve, SBEV's valuation is more worthy of the 9.5X revenue multiple paid when Coca-Cola (NYSE: KO) acquired Glaceau's vitaminwater for $4.2 billion applying a 9.5X multiple. Using that precedent, SBEV could justify a price closer to $6.00, a more than 70% increase from current levels. And with SBEV clearly in hyper-growth mode, the latter valuation is warranted. 

In fact, SBEV has supplied the fuel to justify that rationale. Its guidance calls for a 34% increase to Q3 revenues to roughly $4.14 million, a 39% increase in comparative Q4, and a YoY revenue spike to $15.97 million, representing a 436% increase over last year. Keep in mind, too, the impressive guidance pertains to only the four brands in its current portfolio of premium products and doesn't account for planned acquisitions and more robust national market penetration in the back half of this year. 

Add to that its uplist to the NYSE/American, its growing list of US and international distribution agreements, its deal to distribute all its brands in China, and the implementation of its Qsplash platform to expedite market penetration- the value and investment proposition gets even more compelling. 

Hyper-Growth Mode

In fact, SBEV has already entered into at least seven potentially lucrative distribution agreements for its Copa Di Vino, SALT 100% agave tequila, Pulpoloco sangria, and hydration performance drink TapouT. And these deals aren't small. They team SBEV with several of the country's largest regional Anheuser Busch (NYSE: BUD) distributors. Moreover, with American Software Capital in China, they target a more than $69 billion market opportunity in that country alone. 

Betters still, last week SBEV announced its intention to implement all of its brands into its Qsplash platform, which is expected to quickly expand its brands' presence into national markets. That platform also strengthens its acquisition strategy by further facilitating SBEV's vertically integrated business model to incubate and launch new brands, test the market, and build momentum for future acquisitions. Best of all, Qsplash efficiently expedites brand development AND saves money by keeping growth accretive through a focused multichannel distribution strategy. 

Thus, Qsplash shouldn't be thought of as an accounting tool. In more appropriate terms, it's a powerful driver for brand growth. And that translates to revenue growth.

So, why's the stock down? Blog chatter suggests that the selling pressure is coming from an early retail investment group taking some profits. If so, good for them; taking massive profits is not a bad strategy. However, the excellent news is that they also set the stage for new investors to reap similar rewards.

Valuation More Deserving Of $6.00

In fact, as SBEV management continues to perform near flawlessly in its mission to create shareholder value, as evidenced by its surging Q1 revenue growth, the only thing missing is the industry peer multiple. However, with SBEV releasing its first-ever quarterly and year-end guidance, that disconnect should get cured. 

Remember, guidance is coming from a team that knows success, with some on the team responsible for helping take Red Bull energy drink from zero to billions in sales. Better still, they have led teams at SoBe, Diego, Nestle, and Bacardi as well. And all of those beverages have become billion-dollar brands in the US and international markets. Thus, the management pedigree is top-notch. 

Even better, to expedite near-term growth, SBEV has roughly $15 million in cash and product placements in Walmart (NYSE: WMT), Sam's Club, and Target. Better still, as noted, they also have distribution agreements in place with Anheuser Busch and Miller Coors. Those add to deals with Eagle Brands, Great Bay, Golden Beverage Company, Anheuser Busch distributor, Bernie Little, Johnson Brothers, and divisions of Gulf Distributing Holdings, LLC., which are each positioning SBEV to generate significant brand and revenue growth. Thus, price weakness creates a substantial near and long-term investment opportunity. 

Keep in mind, too, even before its guidance expecting triple-digit-percentage revenue growth by year-end, the company has put up some extraordinary numbers. 

Massive Growth In Q1

In fact, SBEV reported a massive 2058% surge in comparative Q1 revenues. That growth was led by its high-value brands Copa Di Vino wine by the glass, Pulpoloco Sangria, TapouT performance drink, and SALT Naturally Flavored Tequila. Moreover, they set the stage for further growth in Q2 with plans to leverage several high-value distribution agreements that started late in Q1 or after the start of Q2.

Better still, its distribution agreement to expand its product presence in the $69 billion Chinese markets is expected to gain momentum not only in Q3 but also into the end of the year and more so in 2022. Thus, while SBEV's guidance suggests impressive growth, it could be conservative. 

In fact, with SBEV guidance coming from a team of seasoned professionals, chances are that they won't over-promise and under-deliver. Thus, many believe revenues will come in higher.

That's supported by its bullish guidance leaving out potential value from other value-enhancing initiatives. First, SBEV has compelling IP that it expects to monetize, with at least two packaging technologies that are game-changing to the beverage industry. Second, calling for a 70% increase in share price only considers its four current brands under management. That number could swell to closer to ten in the next twelve months. And, third, SBEV is well-capitalized and has a capital structure to drive growth without substantial dilution. 

Better still, expect any acquisition to be immediately accretive to revenue growth. SBEV's mission is to only purchase brands with preexisting brand recognition that are innovators in its category. Thus, expect every new asset to hit the revenue-generating ground running. 

Seizing Opportunity In Hot Markets

Best of all, SBEV only wants brands that can seize an opportunity in hot markets. For example, SALT's expected surge in the flavored tequila market should result from the extraordinary growth in global tequila sales.

In fact, with SALT being one of the first known naturally-infused flavored 100% agave tequilas - it can become a potentially massive asset. And using the multiples above, if SALT can hit $30 million in sales over the next few years, it could justify a share price valuation of roughly $7.50. Imagine if it hits $100 million. And that's a single product! 

Splash Beverage has at least four that can deliver those numbers, making SBEV stock well-positioned to reach a $30 level closer than many may think. Admittedly, it's an ambitious target. However, with four compelling brands, a presence in domestic and international markets, and a team that understands and knows how to maximize its opportunities, it's one that investors should feel comfortable with. And even that exponential increase may be conservative thinking.

In fact, SBEV may be in the process of developing one of the most attractive growth stories in the beverage sector. The better news is that they are doing so with multiple brands, not just one. Hence, at current levels and with numerous shots on goals, SBEV stock may present more than an opportunity- it could offer a path toward exponential returns. 

And the best news is that those returns may be destined to come sooner rather than later- making Splash Beverage Group, Inc. a compelling and timely investment proposition.

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