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Monster Beverage (MNST) Q3 Earnings: Beat in the Cards?
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We expect Monster Beverage Corporation (MNST - Free Report) to beat expectations when it reports third-quarter fiscal 2016 results on Nov 3, after market closes.
Last quarter, the company posted a negative earnings surprise of 4.81%. Meanwhile, it reported positive earnings surprise in two of the past four quarters, with an average negative surprise of 3.18%.
Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Monster Beverage will beat estimates this quarter.
Zacks ESP: The Earnings ESP is +0.89% as the Most Accurate estimate stands at $1.13 while the Zacks Consensus Estimate is pegged lower at $1.12. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Monster Beverage carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Meanwhile, the combination of Monster Beverage’s Zacks Rank #3 and +0.89% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Monster Beverage benefits from strong sales of new products in the U.S. The deal with Coca-Cola Company is expected to expand Monster Beverage’s presence in the international energy drinks market. The Energy Drinks segment reported net sales of $743.5 million in the second quarter, up 14.2% year over year, owing to higher price and increased volume. The volume growth was driven by domestic and international customer demand. The trend is expected to continue in the soon-to-be-reported quarter.
The acquisition of AFF represents an important milestone for the company through the ownership of the proprietary formulas for its principal products. The company believes that it will be able to utilize the full benefits of the transaction through a reduction in operating costs commencing with the third quarter.
However, high professional services costs related to regulatory and litigation issues, unfavorable currency translations and transition costs related to the Coca-Cola deal are hurting Monster Beverage’s profits.
Notably, for the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.12, reflecting a 32.99% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $823.4 million, implying an 8.83% increase.
Other Stocks to Consider
Here are some other companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
The Kraft Heinz Company (KHC - Free Report) , slated to report third-quarter 2016 results on Nov 3, has an earnings ESP of +2.63% and a Zacks Rank #2.
Sanderson Farms Inc. has an earnings ESP of +1.89% and a Zacks Rank #1. The company is scheduled to release its results on Dec 15.
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Monster Beverage (MNST) Q3 Earnings: Beat in the Cards?
We expect Monster Beverage Corporation (MNST - Free Report) to beat expectations when it reports third-quarter fiscal 2016 results on Nov 3, after market closes.
Last quarter, the company posted a negative earnings surprise of 4.81%. Meanwhile, it reported positive earnings surprise in two of the past four quarters, with an average negative surprise of 3.18%.
Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Monster Beverage will beat estimates this quarter.
Zacks ESP: The Earnings ESP is +0.89% as the Most Accurate estimate stands at $1.13 while the Zacks Consensus Estimate is pegged lower at $1.12. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Monster Beverage carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Meanwhile, the combination of Monster Beverage’s Zacks Rank #3 and +0.89% ESP makes us reasonably confident of an earnings beat.
MONSTER BEVERAG Price and EPS Surprise
MONSTER BEVERAG Price and EPS Surprise | MONSTER BEVERAG Quote
What is Driving the Better-than-Expected Earnings?
Monster Beverage benefits from strong sales of new products in the U.S. The deal with Coca-Cola Company is expected to expand Monster Beverage’s presence in the international energy drinks market. The Energy Drinks segment reported net sales of $743.5 million in the second quarter, up 14.2% year over year, owing to higher price and increased volume. The volume growth was driven by domestic and international customer demand. The trend is expected to continue in the soon-to-be-reported quarter.
The acquisition of AFF represents an important milestone for the company through the ownership of the proprietary formulas for its principal products. The company believes that it will be able to utilize the full benefits of the transaction through a reduction in operating costs commencing with the third quarter.
However, high professional services costs related to regulatory and litigation issues, unfavorable currency translations and transition costs related to the Coca-Cola deal are hurting Monster Beverage’s profits.
Notably, for the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.12, reflecting a 32.99% year-over-year increase. Meanwhile, our estimate for revenues is pegged at $823.4 million, implying an 8.83% increase.
Other Stocks to Consider
Here are some other companies in the consumer staples sector that can be considered as our model shows that they have the right combination of elements to post an earnings beat in their upcoming releases:
Avon Products Inc. , slated to report third-quarter 2016 results on Nov 3, has an earnings ESP of +33.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Kraft Heinz Company (KHC - Free Report) , slated to report third-quarter 2016 results on Nov 3, has an earnings ESP of +2.63% and a Zacks Rank #2.
Sanderson Farms Inc. has an earnings ESP of +1.89% and a Zacks Rank #1. The company is scheduled to release its results on Dec 15.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>