Monster Beverage (MNST) Stock Down On Q3 Earnings Miss

Shares of Monster Beverage Corporation (NASDAQ:MNST) declined 5.18% in afterhours on Nov 3, as the energy drink company’s third-quarter numbers did not meet expectations.

Third Quarter Details

Monster Beverage’s third-quarter adjusted earnings of 99 cents per share missed the Zacks Consensus Estimate of $1.12 by 11.6%. Meanwhile, earnings increased 17.9% year over year on lower share count as a result of the completion of the modified Dutch auction in Jun 2016.

Net sales of $787.95 million missed the Zacks Consensus Estimate of $817.20 million by 3.6%. However, the figure improved 4.1% year over year.

Foreign currency had an unfavorable impact of $2.6 million on net sales. Net sales outside the U.S. rose 11.8% to $190.8 million on a year-over-year basis.

The effective tax rate in the third quarter was 33.8 %, compared with 39.4% a year ago. The decrease in the effective tax rate was due to a one-time tax benefit related to a prior period domestic production deduction.

As a result of the AFF transaction, the company achieved raw material cost savings of $23.3 million in the third quarter.

Segment Details

Monster Energy Drinks Segment: The segment reported net sales of $710.1 million, up 3.4% year over year.

Strategic Brands segment: This segment includes brands acquired from Coca-Cola. Net sales at the segment increased 3.2% to $72.1 million in the third quarter of 2016 compared with $69.9 million in the comparable quarter of 2015.

Other: Net sales for the company's Other segment, which includes certain products of American Fruits & Flavors sold to independent third parties, were $5.7 million in the quarter under review. Notably, the segment had reported no net sales in the prior-year quarter.

Margins

Third-quarter 2016 gross margin rose 230 basis points (bps) to 63.8%.
Operating income in the third quarter was $290.4 million, compared with $291.4 million in the prior-year quarter.

MONSTER BEVERAG Price, Consensus and EPS Surprise

Monster Beverage carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in this industry include Post Embotelladora Andina S.A. AKO.B, Coca-Cola Amatil Limited (OTC:CCLAY) and DAVIDsTEA Inc. (NASDAQ:DTEA) .

Embotelladora – a Zacks Rank #1 (Strong Buy) stock – is expected to witness a 6.47% decline in 2016 earnings. You can see the complete list of today’s Zacks #1 Rank stocks here.

Coca-Cola Amatil is likely to see a 10.81% rise in 2016 earnings. The company carries a Zacks Rank #2 (Buy).

DAVIDsTEA carries a Zanks Rank #2. Full-year 2017 earnings growth is projected at 29.03% for the company.

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>>