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Monster Beverage (MNST) Stock Down on Q2 Earnings & Sales Miss
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Monster Beverage Corporation (MNST - Free Report) delivered second-quarter 2024 results, wherein the top and bottom lines lagged their respective Zacks Consensus Estimate. However, both metrics improved year over year on gains from the expansion of the energy drinks category and product launches.
Despite the year-over-year improvement, shares of this energy drink and alternative beverage marketer have lost nearly 8% in after-hours trading on Aug 7. We note that Monster Beverage’s shares have lost 8.5% in the past three months against the industry’s 2% growth.
Q2 Details
Monster Beverage’s adjusted earnings of 41 cents per share missed the Zacks Consensus Estimate of 45 cents. The figure advanced 5.1% year over year.
Net sales of $1.9 billion grew 2.5% year over year but lagged the consensus estimate of $2 billion. Unfavorable currency translations hurt net sales by $67.7 million. Net sales rose 6.1% on a currency-adjusted basis, and 7.4% excluding the Alcohol Brands unit.
Management highlighted that the energy drink category in the United States and across a few other countries witnessed lower growth rates in the reported quarter, due to soft store foot traffic and a shift at retail toward more mass and dollar channels. Adverse foreign currency exchange rates continued to act as deterrents.
However, the energy category grew globally. The opportunities in penetration, per capita consumption and consumers’ requirements for energy were positive. The company is focused on growing sales in non-Nielsen measured channels.
Monster Beverage has been reviewing opportunities for price increases internationally. The company is making a roughly 5% price increase on its core brands and packages, effective Nov 1, 2024, in the United States. It had a market share leadership in the energy drink category for its entire outlets combined in the United States for the 13 weeks ended Jul 2, 2024.
Per the Nielsen reports for the 13 weeks through Jul 20, 2024, for the company’s combined outlets, such as convenience, grocery, drug and mass merchandisers, sales in dollars in the energy drink category with energy shots rose 0.6% year over year. Its energy brands sales, excluding Bang, fell 2.5% in the 13-week period. Monster’s sales were down 3%. Reign’s sales dipped 0.5%. While sales of Full Throttle declined 6.9%, the same of Red Bull rose 1.7%.
Net sales to customers outside the United States rose 4.3% to $746 million, representing about 39% of the total net sales. On a currency-adjusted basis, sales to customers outside the United States improved 13.7%.
Segmental Performance
Monster Energy Drinks: Sales of this segment, which includes Monster Energy drinks, Reign Total Body Fuel high-performance energy drinks, Reign Storm total wellness energy drinks, Bang Energy drinks and Monster Tour Water, rose 3.3% to $1.74 billion. The segment’s sales included a negative impact of $53.6 million from adverse currency rates. On a currency-adjusted basis, net sales for the segment rose 6.5%.
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 grew 9.6% year over year to $109.2 million. Currency headwinds hurt sales by $14 million. On a currency-adjusted basis, net sales for the segment rose 23.6%.
Alcohol Brands: Net sales for the segment, which includes The Beast Unleashed, Nasty Beast Hard Tea, and several craft beers and hard seltzers, plunged 31.9% year over year to $41.6 million, due to the soft sales volume of flavored malt beverages. Brewing had a challenging quarter.
Other: Net sales for the segment, which includes some products of American Fruits & Flavors sold to independent third parties (AFF Third-Party Products), dipped 4.2% year over year to $7 million.
Costs & Margins
The cost of sales was $881.1 million, up 0.05% year over year. The company’s gross margin expanded 110 basis points (bps) year over year to 53.6%, due to pricing actions, lower freight-in costs and reduced aluminum can costs, somewhat offset by production inefficiencies.
Operating expenses grew 9.3% year over year to $492.3 million, due to higher sponsorship and endorsement expenses, elevated payroll expenses and increased storage and warehouse costs. As a percentage of sales, operating expenses expanded 160 bps to 25.9%.
Selling expenses, as a percentage of net sales, increased 80 bps year over year to 10.1%. Distribution costs, as a percentage of net sales, rose 20 bps to 4.6%. General and administrative expenses, as a percentage of net sales, jumped 60 bps year over year to 11.2%. Operating income of $527.2 million rose 0.6% year over year.
Other Financials
This current Zacks Rank #3 (Hold) company ended the second quarter with cash and cash equivalents of $1.6 billion and total stockholders' equity of $5.9 billion.
On Jun 10, 2024, the company revealed the final results of its $3-billion modified “Dutch auction” tender offer. It accepted nearly 56.6 million shares of common stock at a purchase price of $53 per share for an overall price of around $3 billion, excluding fees and expenses associated with the tender offer. Monster Beverage repurchased nearly 2.2 million shares of its common stock for $107.7 million, excluding broker commissions.
Post Jun 30, 2024, the company bought back about 3.9 million shares of its common stock at an average purchase price of $49.59 per share for a total value of $192.2 million, excluding broker commissions. As of Aug 6, 2024, roughly $342 million was available for repurchase under its earlier authorized repurchase program.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported levels.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported levels.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Post Holdings (POST - Free Report) , which is a consumer-packaged goods company and is involved in the production of refrigerated, foodservice and nutrition product categories, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for POST’s current financial-year sales and EPS indicates growth of 14.2% and 6.9%, respectively, from the year-ago reported figures.
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Monster Beverage (MNST) Stock Down on Q2 Earnings & Sales Miss
Monster Beverage Corporation (MNST - Free Report) delivered second-quarter 2024 results, wherein the top and bottom lines lagged their respective Zacks Consensus Estimate. However, both metrics improved year over year on gains from the expansion of the energy drinks category and product launches.
Despite the year-over-year improvement, shares of this energy drink and alternative beverage marketer have lost nearly 8% in after-hours trading on Aug 7. We note that Monster Beverage’s shares have lost 8.5% in the past three months against the industry’s 2% growth.
Q2 Details
Monster Beverage’s adjusted earnings of 41 cents per share missed the Zacks Consensus Estimate of 45 cents. The figure advanced 5.1% year over year.
Net sales of $1.9 billion grew 2.5% year over year but lagged the consensus estimate of $2 billion. Unfavorable currency translations hurt net sales by $67.7 million. Net sales rose 6.1% on a currency-adjusted basis, and 7.4% excluding the Alcohol Brands unit.
Monster Beverage Corporation Price and Consensus
Monster Beverage Corporation price-consensus-chart | Monster Beverage Corporation Quote
Management highlighted that the energy drink category in the United States and across a few other countries witnessed lower growth rates in the reported quarter, due to soft store foot traffic and a shift at retail toward more mass and dollar channels. Adverse foreign currency exchange rates continued to act as deterrents.
However, the energy category grew globally. The opportunities in penetration, per capita consumption and consumers’ requirements for energy were positive. The company is focused on growing sales in non-Nielsen measured channels.
Monster Beverage has been reviewing opportunities for price increases internationally. The company is making a roughly 5% price increase on its core brands and packages, effective Nov 1, 2024, in the United States. It had a market share leadership in the energy drink category for its entire outlets combined in the United States for the 13 weeks ended Jul 2, 2024.
Per the Nielsen reports for the 13 weeks through Jul 20, 2024, for the company’s combined outlets, such as convenience, grocery, drug and mass merchandisers, sales in dollars in the energy drink category with energy shots rose 0.6% year over year. Its energy brands sales, excluding Bang, fell 2.5% in the 13-week period. Monster’s sales were down 3%. Reign’s sales dipped 0.5%. While sales of Full Throttle declined 6.9%, the same of Red Bull rose 1.7%.
Net sales to customers outside the United States rose 4.3% to $746 million, representing about 39% of the total net sales. On a currency-adjusted basis, sales to customers outside the United States improved 13.7%.
Segmental Performance
Monster Energy Drinks: Sales of this segment, which includes Monster Energy drinks, Reign Total Body Fuel high-performance energy drinks, Reign Storm total wellness energy drinks, Bang Energy drinks and Monster Tour Water, rose 3.3% to $1.74 billion. The segment’s sales included a negative impact of $53.6 million from adverse currency rates. On a currency-adjusted basis, net sales for the segment rose 6.5%.
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 grew 9.6% year over year to $109.2 million. Currency headwinds hurt sales by $14 million. On a currency-adjusted basis, net sales for the segment rose 23.6%.
Alcohol Brands: Net sales for the segment, which includes The Beast Unleashed, Nasty Beast Hard Tea, and several craft beers and hard seltzers, plunged 31.9% year over year to $41.6 million, due to the soft sales volume of flavored malt beverages. Brewing had a challenging quarter.
Other: Net sales for the segment, which includes some products of American Fruits & Flavors sold to independent third parties (AFF Third-Party Products), dipped 4.2% year over year to $7 million.
Costs & Margins
The cost of sales was $881.1 million, up 0.05% year over year. The company’s gross margin expanded 110 basis points (bps) year over year to 53.6%, due to pricing actions, lower freight-in costs and reduced aluminum can costs, somewhat offset by production inefficiencies.
Operating expenses grew 9.3% year over year to $492.3 million, due to higher sponsorship and endorsement expenses, elevated payroll expenses and increased storage and warehouse costs. As a percentage of sales, operating expenses expanded 160 bps to 25.9%.
Selling expenses, as a percentage of net sales, increased 80 bps year over year to 10.1%. Distribution costs, as a percentage of net sales, rose 20 bps to 4.6%. General and administrative expenses, as a percentage of net sales, jumped 60 bps year over year to 11.2%. Operating income of $527.2 million rose 0.6% year over year.
Other Financials
This current Zacks Rank #3 (Hold) company ended the second quarter with cash and cash equivalents of $1.6 billion and total stockholders' equity of $5.9 billion.
On Jun 10, 2024, the company revealed the final results of its $3-billion modified “Dutch auction” tender offer. It accepted nearly 56.6 million shares of common stock at a purchase price of $53 per share for an overall price of around $3 billion, excluding fees and expenses associated with the tender offer. Monster Beverage repurchased nearly 2.2 million shares of its common stock for $107.7 million, excluding broker commissions.
Post Jun 30, 2024, the company bought back about 3.9 million shares of its common stock at an average purchase price of $49.59 per share for a total value of $192.2 million, excluding broker commissions. As of Aug 6, 2024, roughly $342 million was available for repurchase under its earlier authorized repurchase program.
Key Picks
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported levels.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported levels.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Post Holdings (POST - Free Report) , which is a consumer-packaged goods company and is involved in the production of refrigerated, foodservice and nutrition product categories, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for POST’s current financial-year sales and EPS indicates growth of 14.2% and 6.9%, respectively, from the year-ago reported figures.