Monster Beverage’s (MNST) Q1 Earnings Loss, Y/Y Sales Increase – May 3, 2024

Monster Beverage Corporation (MNST Free Report) delivered first-quarter 2024 results with the top and bottom lines below the Zacks Consensus Estimate. However, both figures improved year over year thanks to gains from energy drink category expansion and product launches.

Monster Beverage’s adjusted earnings of 42 cents per share lagged the Zacks Consensus Estimate of 44 cents. The figure increased by 10.5% year on year.

Net sales of $1.90 billion improved 11.8% year over year, but fell short of the consensus estimate of $1.92 billion. Adverse currency translations negatively impacted net sales by $64.4 million. On a currency-adjusted basis, net sales increased by 15.6%.

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

We note that shares of this current Zacks Rank #3 (Hold) company are up 5.9% over the past three months, while the industry is down 4.2%.

Segmental performance

Monster Energy Drinks: The segment includes Monster Energy drinks, Reign Total Body Fuel premium energy drinks and True North Pure Energy Seltzers. The segment’s net sales increased 10.7% year over year to $1.73 billion. Segment revenue included a negative impact of $54.6 million due to unfavorable foreign exchange rates. On a currency-adjusted basis, net sales for the segment increased 14.2%.

Strategic Brands: In addition to 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 segment revenue by $9.8 million. On a currency-adjusted basis, net sales for the segment increased 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, increased 21.1% year over year to $56.1 million.

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

Costs & Margins

Cost of sales was $872 million, up 8.9% year over year. The company’s gross margin grew 130 basis points (bps) year over year to 54.1%, driven by price promotions, lower freight costs and lower input costs.

Operating expenses increased 17.5% year over year to $485.1 million. As a percentage of sales, operating costs increased by 120 basis points to 25.5%. Cost of sales, as a percentage of net sales, increased 40 basis points year-over-year to 9.2%.

Distribution costs, as a percentage of net sales, increased by 50 basis points to 5%. General and administrative expenses, as a percentage of net sales, increased 40 basis points year-over-year to 11.4%.

Operating income of $542 million rose 11.7% year over year. The positive effect was driven by an increase in turnover and gross margin.

Other financial data

Monster Beverage ended the first quarter of 2024 with cash and cash equivalents of $2.6 billion and total shareholders’ equity of $8.6 billion. Short-term investments amounted to $984.2 million as of March 31, 2024.

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 approved share repurchase plan.

Most important choices

We have highlighted three better ranked stocks from the consumer staples sector viz Coca-Cola FEMSA (KOF Free report), Vita Coco company (COCO Free report) and Diageo (DEO Free report).

Coca-Cola FEMSA currently has a Zacks Rank #2 (Buy). KOF shares are up 5.7% over the past three months. You can see 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 revenue and earnings per share (EPS) suggests growth of 10.7% and 25.1%, respectively, from reported figures in the prior-year period. KOF has a negative earnings surprise of 2.1% on average over the four quarters.

Vita Coco currently has a Zacks Rank of 2. COCO stock has gained 10.6% over the past three months. The company has an average fourth-quarter earnings surprise of 31.3%.

The Zacks Consensus Estimate for Vita Coco’s current fiscal year revenue and earnings suggests growth of 1.8% and 24.3%, respectively, from reported figures in the prior-year period.

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

The Zacks Consensus Estimate for Diageo’s current fiscal year sales suggests growth of 11% versus reported figures in the prior-year period. The company’s consensus EPS figure indicates an 8.2% decline from the prior-year quarter.


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