PepsiCo Inc. (NYSE: PEP), one of the world’s largest makers of sugary drinks, has bought SodaStream International Ltd. (NASDAQ: SODA). The America food giant will pay a premium for an already surging stock, fueled by extraordinary financial results.

The price is so high, as a matter of fact, that PepsiCo may be overpaying. At least its board can make the case the SodaStream’s revenue rose by over 30% last quarter.

SodaStream offers PepsiCo two advantages. First, its products comprised more of water than of sugar. Second, people use the product at home, while PepsiCo products are bought at retail outlets. Ramon Laguarta, CEO-elect and president of PepsiCo, said as much:

SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalyzing our ability to offer personalized in-home beverage solutions around the world. From breakthrough innovations like Drinkfinity to beverage dispensing technologies like Spire for foodservice and Aquafina water stations for workplaces and colleges, PepsiCo is finding new ways to reach consumers beyond the bottle, and today’s announcement is fully in line with that strategy.

PepsiCo will pay $144 a share for SodaStream, which comes to $3.2 billion. That is on top of a stock price that has risen from a 52-week low of $57.12 to a high for the period of $130.30. The premium may seem small, but not for the many people who bought the stock earlier in the year.

In the June quarter, SodaStream revenue rose 31% to $172 million. Net income was up 87% to $26 million. SodaStream had nearly $200 in cash and cash equivalents at the end of the quarter. Nevertheless, with a revenue run rate of $750 million, the $3.2 billion is not cheap.

One mitigating factor to justify the price is that SodaStream management has made the case that operating results will continue to surge. As it posted guidance at the end of the previous quarter, the company’s executives guided:

For 2018, the Company currently expects full year revenue to increase approximately 23% over 2017 revenue, up from its previous guidance of approximately 15%.

Operating income for 2018 is now expected to increase approximately 44% over 2017 operating income, compared to its previous guidance of approximately 15%.

Diluted earnings per share is now expected to increase approximately 31% over 2017, compared to its previous guidance of an approximate 8% increase.

It would be hard, if not impossible, to find results like that elsewhere in the sector.

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