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Is Monster Beverage (MNST) Poised for an Earnings Beat in Q3?

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Zacks Equity Research
·4 min read
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Monster Beverage Corporation MNST is likely to report third-quarter 2020 results on Nov 5, after the closing bell. Notably, the company has a trailing four-quarter earnings surprise of 8.8%, on average. In the last reported quarter, this California-based company’s bottom line beat the Zacks Consensus Estimate by 22.9%.

We note that the Zacks Consensus Estimate for third-quarter earnings has remained stable at 63 cents over the past 30 days. The figure suggests growth of 14.6% from the prior-year quarter. The Zacks Consensus Estimate for revenues is pegged at $1.25 billion, which indicates growth of 10.4% from the prior-year reported figure.

Factors to Note

Monster Beverage has been benefiting from strength in the energy drinks category even amid the COVID-19 pandemic. It has been experiencing continued strength in its energy drinks category, which has been driving its performance. The company is expected to continue its trend of delivering robust growth in the energy drinks business, thanks to its wide range of energy drink brands. Additionally, management is optimistic about the significant growth potential of its Monster Energy brand. Also, it expects product launches across the Monster family to have driven the overall top and bottom line in the third quarter.

We note that the company’s energy drink category, including Reign Total Body Fuel high-performance energy drinks and Reign Inferno thermogenic fuel high-performance energy drinks in the United States and outside, has been a significant growth driver. Also, Monster Beverage has been expanding international operations. These are expected to have benefited the company’s third-quarter performance.

Monster Beverage Corporation Price and EPS Surprise

 

Monster Beverage Corporation Price and EPS Surprise
Monster Beverage Corporation Price and EPS Surprise

Monster Beverage Corporation price-eps-surprise | Monster Beverage Corporation Quote

Moreover, the company is likely to have benefited from the reopening of stores in the third quarter, which also reflected sequential sales growth in the second half of the second quarter. Further, it has been witnessing a shift in consumer preference since mid-March, with a spike in demand for at-home consumption. Solid performance in the online, club store, mass merchandiser and grocery and related businesses has been aiding the top line despite weak traffic in the convenience and gas channel as well as drab results at the food service on-premise unit.

The company’s earnings per share for the third quarter are likely to have reflected gains from cost leverage along with gross and operating margin growth. In the last reported quarter, the company noted that it is not facing any supply-chain disruptions, which should have kept pandemic-related impacts minimal in the third quarter.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Monster Beverage this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Monster Beverage has a Zacks Rank #3 and an Earnings ESP of +1.19%.

3 More Stocks With a Favorable Combination

Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Purple Innovation, Inc. PRPL has an Earnings ESP of +5.82% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nu Skin Enterprises, Inc. NUS has an Earnings ESP of +3.54% and a Zacks Rank #2.

Grocery Outlet Holding Corp. GO has an Earnings ESP of +10.76% and a Zacks Rank #2.

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