Why Is Monster Beverage (MNST) Up 7.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Monster Beverage (MNST). Shares have added about 7.1% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Monster Beverage 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. Monster Beverage’s Q2 Earnings & Sales Miss EstimatesMonster Beverage 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.Q2 DetailsMonster 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.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 PerformanceMonster 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 & MarginsThe 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 FinancialsThe 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.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month.The consensus estimate has shifted -6.6% due to these changes.VGM ScoresAt this time, Monster Beverage has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Monster Beverage has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Performance of an Industry PlayerMonster Beverage belongs to the Zacks Beverages - Soft drinks industry. Another stock from the same industry, Keurig Dr Pepper, Inc (KDP), has gained 7.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.Keurig Dr Pepper reported revenues of $3.92 billion in the last reported quarter, representing a year-over-year change of +3.5%. EPS of $0.45 for the same period compares with $0.42 a year ago.Keurig Dr Pepper is expected to post earnings of $0.51 per share for the current quarter, representing a year-over-year change of +6.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Keurig Dr Pepper. Also, the stock has a VGM Score of D.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. 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