Back to top

Image: Bigstock

Monster Beverage's (MNST) Q1 Earnings Miss, Sales Rise Y/Y

Read MoreHide Full Article

Monster Beverage Corporation (MNST - Free Report) delivered first-quarter 2024 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.

Monster Beverage’s adjusted earnings of 42 cents per share missed the Zacks Consensus Estimate of 44 cents. The figure advanced 10.5% year over year.

Net sales of $1.90 billion improved 11.8% year over year but lagged the consensus estimate of $1.92 billion. Unfavorable currency translations hurt net sales by $64.4 million. On a currency-adjusted basis, net sales rose 15.6%.

 

Net sales to customers outside the United States rose 19.5% to $744.1 million, representing about 390% of the total net sales. On a currency-adjusted basis, sales to customers outside the United States improved 29.8%.

We note that shares of this current Zacks Rank #3 (Hold) company have gained 5.9% in the past three months against the industry’s 4.2% decline.

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 10.7% year over year to $1.73 billion. The segment’s sales included a negative impact of $54.6 million from adverse currency rates. On a currency-adjusted basis, net sales for the segment rose 14.2%.

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 grew 25.6% year over year to $108.4 million. Currency headwinds hurt the segment’s sales by $9.8 million. On a currency-adjusted basis, net sales for the segment rose 36.9%.

Alcohol Brands: Net sales for the segment, which includes The Beast Unleashed, Nasty Beast Hard Tea, as well as several craft beers and hard seltzers, jumped 21.1% year over year to $56.1 million.

Other: Net sales for the segment, which includes some products of American Fruits & Flavors sold to independent third parties (AFF Third-Party Products), grew 19.9% year over year to $5.5 million.

Costs & Margins

The cost of sales was $872 million, up 8.9% year over year. The company’s gross margin expanded 130 basis points (bps) year over year to 54.1%, driven by pricing actions, lower freight-in costs and reduced input costs.

Operating expenses grew 17.5% year over year to $485.1 million. As a percentage of sales, operating expenses expanded 120 bps to 25.5%. Selling expenses, as a percentage of net sales, increased 40 bps year over year to 9.2%.

Distribution costs, as a percentage of net sales, increased 50 bps to 5%. General and administrative expenses, as a percentage of net sales, jumped 40 bps year over year to 11.4%.

Operating income of $542 million rose 11.7% year over year. The upside was driven by an increase in sales and the gross margin.

Other Financials

Monster Beverage ended first-quarter 2024 with cash and cash equivalents of $2.6 billion and total stockholders' equity of $8.6 billion. Short-term investments, as of Mar 31, 2024, were $984.2 million.

The company bought back 1.8 million shares worth $97.2 million. As of May 2, 2024, it had $642.4 million remaining under the previously authorized share repurchase plan.

Key Picks

We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Coca-Cola FEMSA (KOF - Free Report) , Vita Coco Company (COCO - Free Report) and Diageo (DEO - Free Report) .

Coca-Cola FEMSA currently carries a Zacks Rank #2 (Buy). KOF shares have rallied 5.7% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings per share (EPS) suggests growth of 10.7% and 25.1%, respectively, from the year-ago period’s reported figures. KOF has a trailing four-quarter negative earnings surprise of 2.1%, on average.

Vita Coco currently carries a Zacks Rank of 2. COCO shares have risen 10.6% in the past three months. The company has a trailing four-quarter earnings surprise of 31.3%, on average.

The Zacks Consensus Estimate for Vita Coco’s current financial-year sales and earnings suggests growth of 1.8% and 24.3%, respectively, from the year-ago period’s reported figure.

Diageo currently carries a Zacks Rank of 2. DEO shares have gained 3.4% in the past three months.

The Zacks Consensus Estimate for Diageo’s current financial-year sales suggests growth of 11% from the year-ago period's reported figures. The consensus mark for the company’s EPS indicates a decline of 8.2% from the year-ago quarter’s actual.

Published in