Why Is Monster Beverage (MNST) Up 0.3% Since Last Earnings Report? - TradingView

A month has gone by since the last earnings report for Monster Beverage MNST. Shares have added about 0.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Monster Beverage due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Monster Beverage’s Q4 Earnings Miss, Sales Rise Y/Y

Monster Beverage delivered fourth-quarter 2023 results, wherein the top and bottom lines came below the Zacks Consensus Estimate. However, both metrics improved year over year on gains from the expansion of the energy drinks category and product launches.

The company’s adjusted earnings of 38 cents per share missed the Zacks Consensus Estimate of 39 cents. The figure advanced 31% year over year.

Net sales of $1.73 billion improved 14.4% year over year but lagged the consensus estimate of $1.75 billion. Unfavorable currency translations hurt net sales by $27.1 million in the reported quarter. On a currency-adjusted basis, net sales rose 16.1%.

Net sales to customers outside the United States rose 17.4% to $637 million, representing about 37% of the total net sales. On a currency-adjusted basis, sales to customers outside the United States improved 22.4%.

Segmental Performance

Monster Energy Drinks: The segment includes Monster Energy drinks, Reign Total Body Fuel high-performance energy drinks and True North Pure Energy Seltzers. The segment’s net sales increased 15.1% year over year to $1.60 billion. The segment’s sales included a negative impact of $18.8 million from adverse currency rates. On a currency-adjusted basis, net sales for the segment rose 16.5%.

Strategic Brands: In addition to the affordable energy drink brands, the segment includes a range of energy drink brands acquired from Coca-Cola. The segment’s net sales dipped 1.3% year over year to $91.8 million in the fourth quarter. Currency headwinds hurt the segment’s sales by $8.3 million. On a currency-adjusted basis, net sales for the segment rose 7.7%.

Alcohol Brands: Net sales for the segment, which includes various craft beers and hard seltzers purchased as part of the CANarchy transaction on Feb 17, 2022, jumped 30.6% to $35.2 million for the fourth quarter.

Other: Net sales for the segment, which includes some products of American Fruits & Flavors sold to independent third parties (AFF Third-Party Products), grew 6.2% year over year to $4.9 million.

Costs & Margins

The cost of sales was $791.7 million, up 8.7% year over year. The company’s fourth-quarter 2023 gross margin expanded 240 basis points (bps) year over year to 54.2%, driven by pricing actions, lower freight-in costs and reduced input costs.

Operating expenses grew 29.3% year over year to $504.4 million. As a percentage of sales, operating expenses expanded 340 bps to 29.2%. Selling expenses, as a percentage of net sales, increased 60 bps year over year to 10.2%.

Distribution costs, as a percentage of net sales, contracted 40 bps to 4.6%. General and administrative expenses, as a percentage of net sales, expanded 320 bps year over year to 14.3%.

Operating income of $434 million rose 10% year over year while the metric on an adjusted basis grew 21.4% to $478.9 million. The upside was driven by an increase in sales and the gross margin.

Other Financials

Monster Beverage ended fourth-quarter 2023 with cash and cash equivalents of $2.30 billion and total stockholders' equity of $8.24 billion. Short-term investments, as of Dec 31, 2023, were $955.6 million.

In the reported quarter, the company bought back 0.8 million shares worth $43.2 million. As of Feb 27, 2024, it had $642.4 million remaining under the previously authorized share repurchase plan.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Monster Beverage has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Monster Beverage has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Monster Beverage is part of the Zacks Beverages - Soft drinks industry. Over the past month, Fomento Economico FMX, a stock from the same industry, has gained 4.9%. The company reported its results for the quarter ended December 2023 more than a month ago.

Fomento Economico reported revenues of $11.23 billion in the last reported quarter, representing a year-over-year change of +18.5%. EPS of $1.07 for the same period compares with $0.69 a year ago.

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