Shares of Monster Beverage Corporation (NASDAQ:MNST) declined more than 6% in after-hours trading on Feb 28 after the company reported disappointing fourth-quarter 2017 results. It missed the Zacks Consensus Estimate on both counts.
Earnings & Revenue Discussion
Monster Beverage reported earnings of 35 cents per share, missing the Zacks Consensus Estimate of 37 cents. Earnings however increased from 30 cents a year ago.
Net sales of $810.4 million missed the Zacks Consensus Estimate of $842 million. The figure however improved 7.5% year over year. Foreign currency translation positively impacted net sales by $7.3 million, partially offset by 2% impact from inventory reductions by some of its international distributors.
Net sales to customers outside the United States increased 8.7% year over year to $210.4 million.
Quarterly Segment Details
Monster Energy Drinks: Net sales of the segment, which includes Monster Energy drinks, Monster Hydro energy drinks and Mutant Super Soda drinks, were up 7.6% year over year to $736.1 million.
Strategic Brands: This segment includes various energy-drink brands acquired from Coca-Cola (NYSE:KO) . Net sales at the segment rose 7.8% to $69.6 million in the quarter.
Other: Net sales at the segment, which includes some products of American Fruits & Flavors sold to independent third parties, were flat year over year at $4.7 million.
Inside the Headline Numbers
Fourth-quarter 2017 gross margin fell 400 basis points (bps) to 62.1% due to geographic sales mix since the company’s international operations have a lower profit margin.
Operating expenses, including $46.3 million in distributor termination expenses, decreased 4% year over year to $236.5 million. Operating income in the quarter was $267.1 million, up 6.1% year over year.
Selling expenses, as a percentage of net sales, were 13.6%, up 160 bps from the fourth-quarter 2016.
Effective tax rate in the quarter was 24.8% compared with 29.9% in the prior-year quarter.
2017 Highlights
Net sales came in at $3.4 billion, up 10.5% from 2016 level. Gross margin contracted 20 bps to 63.5%. Earnings increased to $1.42 per share from $1.19 a year ago.
Financials
Monster Beverage ended the quarter with cash and cash equivalent of $528.6 million, compared with $377.6 million as of Dec 31, 2016.
Zacks Rank & Peer Releases
Monster Beverage carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Coca-Cola Company’s comparable earnings in the fourth quarter of 2017 were 39 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. The same improved from the year-ago quarter’s level of 37 cents, courtesy of ongoing productivity efforts.
PepsiCo (NASDAQ:PEP) reported fourth-quarter 2017 earnings per share of $1.31, beating the Zacks Consensus Estimate of $1.30 and increasing 9% year over year.
Dr Pepper Snapple Group’s (NYSE:DPS) fourth-quarter 2017 earnings were in line with the Zacks Consensus Estimate, while revenues lagged the same.
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Coca-Cola Company (The) (KO): Free Stock Analysis Report
Dr Pepper Snapple Group, Inc (DPS): Free Stock Analysis Report
Pepsico, Inc. (PEP): Free Stock Analysis Report
Monster Beverage Corporation (MNST): Free Stock Analysis Report
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