Monster Beverage (MNST): Missed Fourth Quarter Profits, Sales Up YoY
Monster Beverage Company MNST reported fourth-quarter 2023 results, both top and bottom lines of which fell short of the Zacks Consensus Estimate. However, both metrics improved year over year thanks to gains from energy drink category expansion and product launches.
Monster Beverage’s adjusted earnings of 38 cents per share missed the Zacks Consensus Estimate of 39 cents. This figure increased by 31% over one year.
Net sales of $1.73 billion improved 14.4% year over year, but fell short of the consensus estimate of $1.75 billion. Unfavorable currency translations hurt net sales by $27.1 million during the reported quarter. On a currency-adjusted basis, net sales increased by 16.1%.
Monster Beverage Corporation Price and Consensus
Monster Beverage Corporation Price Consensus Chart | Quote from Monster Beverage Corporation
Net sales to customers outside the United States increased 17.4% to $637 million, representing approximately 37% of total net sales. On a currency-adjusted basis, sales to customers outside the United States increased 22.4%.
We note that shares of this current Zacks Rank #3 (Hold) company have gained 5.9% over the past three months, compared to the industry’s decline of 4.2%.
Segmental performance
Monster Energy Drinks: The segment includes Monster Energy Drinks, Reign Total Body Fuel High Performance Energy Drinks and True North Pure Energy Seltzers. The segment’s net sales increased 15.1% year over year to $1.60 billion. Segment sales included a negative impact of $18.8 million from unfavorable foreign exchange rates. On a currency-adjusted basis, segment net sales increased 16.5%.
Strategic Brands: In addition to affordable energy drink brands, the segment includes a range of energy drink brands acquired from Coca-Cola. The segment’s net sales fell 1.3% year over year to $91.8 million in the fourth quarter. Foreign exchange headwinds hurt the segment’s sales by $8.3 million. On a currency-adjusted basis, segment net sales increased 7.7%.
Alcohol brands: Net sales for the segment, which includes various craft beers and hard seltzers purchased in the CANarchy transaction on February 17, 2022, jumped 30.6% to $35.2 million for the fourth quarter.
Other: Net sales for the segment, which includes certain American Fruits & Flavors products sold to independent third parties (AFF Third-Party Products), increased 6.2% year over year to 4, 9 million dollars.
Costs and margins
Cost of sales was $791.7 million, up 8.7% year-over-year. The company’s fourth-quarter 2023 gross margin increased 240 basis points (bps) year-over-year to 54.2%, driven by pricing actions, lower transportation costs and reducing input costs.
Operating expenses increased 29.3% year over year to $504.4 million. As a percentage of revenue, operating expenses increased 340 basis points to 29.2%. Selling expenses, as a percentage of net sales, increased 60 basis points year-over-year to 10.2%.
Distribution costs, as a percentage of net sales, contracted 40 basis points to 4.6%. General and administrative expenses, as a percentage of net sales, increased 320 basis points year over year to 14.3%.
Operating profit of $434 million increased 10% year over year, while the adjusted basis metric rose 21.4% to $478.9 million. The increase is explained by an increase in sales and gross margin.
Other financial data
Monster Beverage ended the fourth quarter of 2023 with cash and cash equivalents of $2.30 billion and total shareholders’ equity of $8.24 billion. Short-term investments, as of December 31, 2023, amounted to $955.6 million.
During the reported quarter, the company repurchased 0.8 million shares worth $43.2 million. As of February 27, 2024, it had $642.4 million remaining under the previously authorized stock repurchase plan.
Actions to consider
We’ve highlighted some higher-ranking stocks in the broader consumer staples space, namely Church and Dwight Co. CHD, Colgate-Palmolive CL and Inter Perfumes NORTH.
Church & Dwight, offering a wide range of household, personal care and specialty products, is currently a Zacks Rank #2 (Buy). CHD has a trailing four-quarter earnings surprise of 10.1% on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Church & Dwight’s sales and earnings for the current fiscal year suggests growth of 8.7% and 6.4%, respectively, from last year’s numbers.
Colgate, a leading consumer goods company, currently sports a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.
The Zacks Consensus Estimate for CL’s current fiscal year sales and earnings suggests growth of 3.5% and 7.7%, respectively, from the figures reported a year ago.
Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of perfumes and related products. It currently carries a Zacks Rank of 2.
The Zacks Consensus Estimate for IPAR’s current fiscal year sales and earnings indicates advances of 20.9% and 20.2%, respectively, from the prior year’s numbers. Its earnings surprise over the last four quarters is 45.7% on average.
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