We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Monster Beverage (MNST) to Benefit From Energy Drinks Business
Read MoreHide Full Article
Monster Beverage Corp. (MNST - Free Report) has been experiencing continued strength in its energy drinks category, which is driving its performance. The company has been benefiting from the expansion of the energy drinks category and product launches. Product innovation has played a significant role in the company's success.
Pricing increases, along with lower freight-in costs and reduced aluminum can costs, have been contributing to robust margins. The company’s steady lineup of product launches is likely to help retain its business momentum.
The Zacks Rank #3 (Hold) company has a market capitalization of $57.6 billion. In the past year, shares of the company have gained 7.5% compared with the industry’s 9.3% growth. The stock compared favorably with the sector’s decline of 3.5% in the same period.
The Zacks Consensus Estimate for MNST’s 2024 sales and earnings indicates growth of 11.1% and 15.9%, respectively, from the year-ago registered numbers.
Image Source: Zacks Investment Research
Factors Driving Growth
Monster Beverage remains committed to product launches and innovation to boost growth. During the third quarter, MNST rolled out its first flavored malt beverage alcohol product, The Beast Unleashed, in the United States and received positive feedback. The product is now available in 43 states through a network of beer distributors. This marked the expansion of the distribution of The Beast Unleashed into additional markets, with plans for nationwide distribution by the end of the year.
The company intends to launch a hard iced tea extension of The Beast Unleashed, named Nasty Beast Hardcore Tea, later this year or early next year, with a target of nationwide distribution in the first half of 2024. The brand will be available in four flavors, Original, Half & Half, Razzleberry, and Green. These will be sold in 24-ounce single-serve cans, as well as in a variety of 12-pack of 12-ounce sleek cans.
Monster Beverage has been witnessing robust margin trends driven by the easing of the supply-chain headwinds, particularly reduced freight costs. Additionally, the company continues to benefit from its pricing actions across various regions to negate the impacts of rising commodity costs and inflation. MNST continued to implement price hikes in the third quarter of 2023, with additional price hikes planned in several other markets through the remainder of the year.
In third-quarter 2023, Monster Beverage’s gross margin expanded 170 basis points (bps) to 53%, driven by pricing actions, lower freight-in costs and reduced aluminum can costs. Operating income rose 22% year over year on an increase in sales and the gross margin. The operating margin expanded 180 bps to 27.5% in the reported quarter. Promotional allowances for the third quarter were higher year over year as well as sequentially. The persistence of this trend is likely to continue to contribute to the company’s profitability.
Headwinds to Watch
The beverage industry presents substantial challenges for Monster Beverage, primarily related to the dynamic retail and consumer landscape. Monster Beverage has been witnessing rising costs. The shift in consumers’ preferences has been impacting the volumes of soda beverages and energy drinks. Its profits and margins are particularly pressured due to higher product-mix costs and stepped-up advertising expenses.
Stocks to Pick
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , The Boston Beer Company (SAM - Free Report) and Molson Coors (TAP - Free Report) .
The Zacks Consensus Estimate for Coca Cola FEMSA’s current financial-year sales and earnings indicates growth of 27.9% and 28.2%, respectively, from the prior-year levels. The consensus mark for KOF’s earnings per share (EPS) has moved up by a penny in the past seven days.
Boston Beer currently sports a Zacks Rank of 1. SAM has delivered an average earnings surprise of 9.7% in the last reported quarter.
The Zacks Consensus Estimate for SAM’s current financial-year earnings indicates a rise of 2.7% from the year-ago number. The consensus mark for SAM’s EPS has moved down 1.2% in the past seven days.
Molson Coors currently carries a Zacks Rank #2 (Buy). TAP has a trailing four-quarter earnings surprise of 41.3%, on average.
The Zacks Consensus Estimate for Molson Coors’ current financial year’s sales and earnings implies an improvement of 9.2% and 30.7%, respectively, from the year-ago actuals. The consensus mark for TAP’s EPS has moved up 0.8% in the past 30 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Monster Beverage (MNST) to Benefit From Energy Drinks Business
Monster Beverage Corp. (MNST - Free Report) has been experiencing continued strength in its energy drinks category, which is driving its performance. The company has been benefiting from the expansion of the energy drinks category and product launches. Product innovation has played a significant role in the company's success.
Pricing increases, along with lower freight-in costs and reduced aluminum can costs, have been contributing to robust margins. The company’s steady lineup of product launches is likely to help retain its business momentum.
The Zacks Rank #3 (Hold) company has a market capitalization of $57.6 billion. In the past year, shares of the company have gained 7.5% compared with the industry’s 9.3% growth. The stock compared favorably with the sector’s decline of 3.5% in the same period.
The Zacks Consensus Estimate for MNST’s 2024 sales and earnings indicates growth of 11.1% and 15.9%, respectively, from the year-ago registered numbers.
Image Source: Zacks Investment Research
Factors Driving Growth
Monster Beverage remains committed to product launches and innovation to boost growth. During the third quarter, MNST rolled out its first flavored malt beverage alcohol product, The Beast Unleashed, in the United States and received positive feedback. The product is now available in 43 states through a network of beer distributors. This marked the expansion of the distribution of The Beast Unleashed into additional markets, with plans for nationwide distribution by the end of the year.
The company intends to launch a hard iced tea extension of The Beast Unleashed, named Nasty Beast Hardcore Tea, later this year or early next year, with a target of nationwide distribution in the first half of 2024. The brand will be available in four flavors, Original, Half & Half, Razzleberry, and Green. These will be sold in 24-ounce single-serve cans, as well as in a variety of 12-pack of 12-ounce sleek cans.
Monster Beverage has been witnessing robust margin trends driven by the easing of the supply-chain headwinds, particularly reduced freight costs. Additionally, the company continues to benefit from its pricing actions across various regions to negate the impacts of rising commodity costs and inflation. MNST continued to implement price hikes in the third quarter of 2023, with additional price hikes planned in several other markets through the remainder of the year.
In third-quarter 2023, Monster Beverage’s gross margin expanded 170 basis points (bps) to 53%, driven by pricing actions, lower freight-in costs and reduced aluminum can costs. Operating income rose 22% year over year on an increase in sales and the gross margin. The operating margin expanded 180 bps to 27.5% in the reported quarter. Promotional allowances for the third quarter were higher year over year as well as sequentially. The persistence of this trend is likely to continue to contribute to the company’s profitability.
Headwinds to Watch
The beverage industry presents substantial challenges for Monster Beverage, primarily related to the dynamic retail and consumer landscape. Monster Beverage has been witnessing rising costs. The shift in consumers’ preferences has been impacting the volumes of soda beverages and energy drinks. Its profits and margins are particularly pressured due to higher product-mix costs and stepped-up advertising expenses.
Stocks to Pick
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , The Boston Beer Company (SAM - Free Report) and Molson Coors (TAP - Free Report) .
Coca Cola FEMSA currently sports a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 16.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coca Cola FEMSA’s current financial-year sales and earnings indicates growth of 27.9% and 28.2%, respectively, from the prior-year levels. The consensus mark for KOF’s earnings per share (EPS) has moved up by a penny in the past seven days.
Boston Beer currently sports a Zacks Rank of 1. SAM has delivered an average earnings surprise of 9.7% in the last reported quarter.
The Zacks Consensus Estimate for SAM’s current financial-year earnings indicates a rise of 2.7% from the year-ago number. The consensus mark for SAM’s EPS has moved down 1.2% in the past seven days.
Molson Coors currently carries a Zacks Rank #2 (Buy). TAP has a trailing four-quarter earnings surprise of 41.3%, on average.
The Zacks Consensus Estimate for Molson Coors’ current financial year’s sales and earnings implies an improvement of 9.2% and 30.7%, respectively, from the year-ago actuals. The consensus mark for TAP’s EPS has moved up 0.8% in the past 30 days.