Yahoo Finance Monster (NASDAQ:MNST) Reports Q1 In Line With Expectations
Energy drink company Monster Beverage (NASDAQ:MNST) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 11.8% year on year to $1.90 billion. It made a GAAP profit of $0.42 per share, improving from its profit of $0.38 per share in the same quarter last year.
Is now the time to buy Monster? Find out in our full research report.
Monster (MNST) Q1 CY2024 Highlights:
Revenue: $1.90 billion vs analyst estimates of $1.90 billion (small miss)
EPS: $0.42 vs analyst expectations of $0.44 (3.6% miss)
Gross Margin (GAAP): 54.1%, up from 52.8% in the same quarter last year
Company to commence tender offer to repurchase up to $3.0 billion of stock
Market Capitalization: $55.77 billion
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, said, “We continue to see growth in the energy drink market globally. In the United States, energy is the only segment of the beverage category currently showing unit growth. We continue to grow our sales in non-Nielsen measured channels.
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ:MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Beverages and Alcohol
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales Growth
Monster is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 15.4% over the last three years was solid for a consumer staples business.
This quarter, Monster's revenue grew 11.8% year on year to $1.90 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 10.6% over the next 12 months, a deceleration from this quarter.
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Operating Margin
Operating margin is an important measure of profitability accounting for key expenses such as marketing and advertising, IT systems, wages, and other administrative costs.
In Q1, Monster generated an operating profit margin of 28.5%, in line with the same quarter last year. This indicates the company's costs have been relatively stable.
Zooming out, Monster has been a well-oiled machine over the last two years. It's demonstrated elite profitability for a consumer staples business, boasting an average operating margin of 27%. On top of that, its margin has risen by 2.5 percentage points on average over the last year, showing the company is improving its fundamentals.
Key Takeaways from Monster's Q1 Results
Monster's revenue was roughly in line and EPS missed analysts' expectations. The company also announced that intends to commence a tender offer to repurchase up to $3 billion of stock. Overall, this was a mixed quarter for Monster. The stock is up 3.7% after reporting and currently trades at $55.4 per share.
So should you invest in Monster right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
