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Here's Why Monster Beverage Stock Continues to Show Strength
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Monster Beverage Corp. (MNST - Free Report) has been displaying strong momentum despite the turmoil caused by the coronavirus outbreak. The stock has won investors’ applause for the continuity of operations amid the pandemic and strength in the energy drinks category, which helped post strong first-quarter 2020 results.
Notably, the Zacks Rank #3 (Hold) company has gained 8% in the past three months against the industry’s decline of 11.8%. Further, the stock has rallied 16.8% since reporting strong first-quarter earnings on May 7.
The company reported impressive earnings and sales numbers in first-quarter 2020, driven by meager impacts from the coronavirus pandemic. Notably, its top and bottom lines not only outpaced the Zacks Consensus Estimate but also improved on a year-over-year basis. The company notes that the COVID-19 outbreak had a minimal impact on its first-quarter results, as its flavor manufacturing facilities, co-packers, warehouses and shipment facilities remained operational, maintaining continued supplies. Its bottom-line results for the first quarter reflected gains from cost leverage. Notably, operating expense leverage more than offset the soft gross margin, leading to operating margin growth.
Factors Driving Performance
Monster Beverage has been experiencing continued strength in its energy drinks category, which is driving performance. In first-quarter 2020, the company’s net sales improved 12.3%, while gross sales were up 13.4%. Improvement in gross and net sales was mainly attributed to gains from the Monster Energy brand energy drinks internationally as well as Reign Total Body Fuel high-performance energy drinks. Net sales for the Monster Energy Drinks segment rose 14%.
We note that the company offers a wide range of energy drink brands such as Monster Energy, Java Monster, Cafe Monster and Espresso Monster, among others. Moving ahead, management is optimistic about strength in the energy drinks category, with the Monster Energy brand growing significantly. Also, product launches across the Monster family will drive the company’s overall top and bottom lines.
Product innovation plays a significant role in its success. Monster Beverage remains committed to product launches and innovation to boost growth. In first-quarter 2020, the company launched several products in the United States, including a line of Reign Inferno Thermogenic Fuel, two new energy drinks in the Monster Ultra line, a line of Java Monster 300, and a line of Monster Hydro Super Sport as well as NOS Turbo.
Further, it launched various Monster Energy brand energy drinks and Reign Total Body Fuel high-performance energy drinks in international markets. Moreover, the company’s affordable energy brand — Predator — was launched in additional international markets, including Mexico, in the first quarter. It plans to launch the brand to more markets in 2020.
Other notable product launches included the Monster Energy Dragon Tea in Brazil in the first quarter and in China in April 2020. The company also added the Burn Dark Energy to its portfolio in Russia, a new Nalu energy tea line in Belgium and the national launch of Mother Epic Swell in Australia, after a limited launch last year.
Will the Coronavirus Pandemic Hurt in Q2?
Although the impacts of the coronavirus outbreak were not material in the first quarter, Monster Beverage notes that its April sales were significantly hurt by the pandemic. Meanwhile, bottler/distributor sales to retailers in the United States experienced lesser impacts. Moreover, the company notes that there has been a change in consumer channel preference since the middle of March, with a rise in in-home consumption and a fall in immediate consumption. The company’s initial sales for the second quarter (through May 7) have been adversely impacted by lower traffic in convenience stores and gas stations along with a decline in food service on-premise channel. Meanwhile, the e-commerce, club store, mass merchandiser, and grocery and related businesses have witnessed stable trends.
Moreover, the company notes that its recent launches in the United States and many other markets did not achieve the desired results due to the coronavirus pandemic. This was partly due to some retailers postponing their new schematic plans, which included Monster Beverage’s new products. The company is now working with distributors and bottlers to re-prioritize the launches when things turn to normalcy to maximize their distribution to all channels.
Conclusion
Although the impacts of the COVID-19 outbreak remain a concern for the second quarter, we expect the company to remain resilient on strength in the energy drinks category. In fact, the stock’s VGM Score of B and long-term earnings growth rate of 7.5% reflect its inherent strength.
Constellation Brands Inc. (STZ - Free Report) , with a Zacks Rank #2 (Buy) at present, has an expected long-term earnings growth rate of 1.5%.
The Boston Beer Company, Inc. (SAM - Free Report) , also a Zacks Rank #2 stock, delivered a positive earnings surprise of 4.7%, on average, in the trailing four quarters.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Here's Why Monster Beverage Stock Continues to Show Strength
Monster Beverage Corp. (MNST - Free Report) has been displaying strong momentum despite the turmoil caused by the coronavirus outbreak. The stock has won investors’ applause for the continuity of operations amid the pandemic and strength in the energy drinks category, which helped post strong first-quarter 2020 results.
Notably, the Zacks Rank #3 (Hold) company has gained 8% in the past three months against the industry’s decline of 11.8%. Further, the stock has rallied 16.8% since reporting strong first-quarter earnings on May 7.
The company reported impressive earnings and sales numbers in first-quarter 2020, driven by meager impacts from the coronavirus pandemic. Notably, its top and bottom lines not only outpaced the Zacks Consensus Estimate but also improved on a year-over-year basis. The company notes that the COVID-19 outbreak had a minimal impact on its first-quarter results, as its flavor manufacturing facilities, co-packers, warehouses and shipment facilities remained operational, maintaining continued supplies. Its bottom-line results for the first quarter reflected gains from cost leverage. Notably, operating expense leverage more than offset the soft gross margin, leading to operating margin growth.
Factors Driving Performance
Monster Beverage has been experiencing continued strength in its energy drinks category, which is driving performance. In first-quarter 2020, the company’s net sales improved 12.3%, while gross sales were up 13.4%. Improvement in gross and net sales was mainly attributed to gains from the Monster Energy brand energy drinks internationally as well as Reign Total Body Fuel high-performance energy drinks. Net sales for the Monster Energy Drinks segment rose 14%.
We note that the company offers a wide range of energy drink brands such as Monster Energy, Java Monster, Cafe Monster and Espresso Monster, among others. Moving ahead, management is optimistic about strength in the energy drinks category, with the Monster Energy brand growing significantly. Also, product launches across the Monster family will drive the company’s overall top and bottom lines.
Product innovation plays a significant role in its success. Monster Beverage remains committed to product launches and innovation to boost growth. In first-quarter 2020, the company launched several products in the United States, including a line of Reign Inferno Thermogenic Fuel, two new energy drinks in the Monster Ultra line, a line of Java Monster 300, and a line of Monster Hydro Super Sport as well as NOS Turbo.
Further, it launched various Monster Energy brand energy drinks and Reign Total Body Fuel high-performance energy drinks in international markets. Moreover, the company’s affordable energy brand — Predator — was launched in additional international markets, including Mexico, in the first quarter. It plans to launch the brand to more markets in 2020.
Other notable product launches included the Monster Energy Dragon Tea in Brazil in the first quarter and in China in April 2020. The company also added the Burn Dark Energy to its portfolio in Russia, a new Nalu energy tea line in Belgium and the national launch of Mother Epic Swell in Australia, after a limited launch last year.
Will the Coronavirus Pandemic Hurt in Q2?
Although the impacts of the coronavirus outbreak were not material in the first quarter, Monster Beverage notes that its April sales were significantly hurt by the pandemic. Meanwhile, bottler/distributor sales to retailers in the United States experienced lesser impacts. Moreover, the company notes that there has been a change in consumer channel preference since the middle of March, with a rise in in-home consumption and a fall in immediate consumption. The company’s initial sales for the second quarter (through May 7) have been adversely impacted by lower traffic in convenience stores and gas stations along with a decline in food service on-premise channel. Meanwhile, the e-commerce, club store, mass merchandiser, and grocery and related businesses have witnessed stable trends.
Moreover, the company notes that its recent launches in the United States and many other markets did not achieve the desired results due to the coronavirus pandemic. This was partly due to some retailers postponing their new schematic plans, which included Monster Beverage’s new products. The company is now working with distributors and bottlers to re-prioritize the launches when things turn to normalcy to maximize their distribution to all channels.
Conclusion
Although the impacts of the COVID-19 outbreak remain a concern for the second quarter, we expect the company to remain resilient on strength in the energy drinks category. In fact, the stock’s VGM Score of B and long-term earnings growth rate of 7.5% reflect its inherent strength.
3 Beverage Stocks You May Count on
Reeds, Inc. (REED - Free Report) has an expected long-term earnings growth rate of 20% and it currently sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Constellation Brands Inc. (STZ - Free Report) , with a Zacks Rank #2 (Buy) at present, has an expected long-term earnings growth rate of 1.5%.
The Boston Beer Company, Inc. (SAM - Free Report) , also a Zacks Rank #2 stock, delivered a positive earnings surprise of 4.7%, on average, in the trailing four quarters.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>