Why Is Monster Beverage (MNST) Up 5.5% Since Its Last Earnings Report?

It has been about a month since the last earnings report for Monster Beverage Corporation MNST. Shares have added about 5.5% in that time frame.

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

Fourth-Quarter 2017 Results

Earnings & Revenues Discussion

Monster Beverage reported earnings of 35 cents per share, missing the Zacks Consensus Estimate of 37 cents. Earnings however increased from 30 cents a year ago.

Net sales of $810.4 million missed the Zacks Consensus Estimate of $842 million. The figure however improved 7.5% year over year. Foreign currency translation positively impacted net sales by $7.3 million, partially offset by 2% impact from inventory reductions by some of its international distributors.

Net sales to customers outside the United States increased 8.7% year over year to $210.4 million.

Quarterly Segment Details

Monster Energy Drinks: Net sales of the segment, which includes Monster Energy drinks, Monster Hydro energy drinks and Mutant Super Soda drinks, were up 7.6% year over year to $736.1 million.

Strategic Brands: This segment includes various energy-drink brands acquired from Coca-Cola. Net sales at the segment rose 7.8% to $69.6 million in the quarter.

Other: Net sales at the segment, which includes some products of American Fruits & Flavors sold to independent third parties, were flat year over year at $4.7 million.

Inside the Headline Numbers

Fourth-quarter 2017 gross margin fell 400 basis points (bps) to 62.1% due to geographic sales mix since the company’s international operations have a lower profit margin.

Operating expenses, including $46.3 million in distributor termination expenses, decreased 4% year over year to $236.5 million. Operating income in the quarter was $267.1 million, up 6.1% year over year.

Selling expenses, as a percentage of net sales, were 13.6%, up 160 bps from the fourth-quarter 2016.

Effective tax rate in the quarter was 24.8% compared with 29.9% in the prior-year quarter.

2017 Highlights

Net sales came in at $3.4 billion, up 10.5% from 2016 level. Gross margin contracted 20 bps to 63.5%. Earnings increased to $1.42 per share from $1.19 a year ago.

Financials

Monster Beverage ended the quarter with cash and cash equivalent of $528.6 million, compared with $377.6 million as of Dec 31, 2016.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Monster Beverage Corporation Price and Consensus

 

Monster Beverage Corporation Price and Consensus | Monster Beverage Corporation Quote

VGM Scores

At this time, MNST has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. Following the exact same course, the stock was also allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

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

The company's stock is suitable solely for growth based on our styles scores.

Outlook

MNST has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research