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Monster Beverage (MNST) to Post Q1 Earnings: What's in Store?

Zacks Equity Research

Monster Beverage Corporation MNST is slated to release first-quarter 2019 results on May 2.

In the last reported quarter, the company recorded positive earnings surprise of 7.5%. Moreover, it delivered average positive earnings surprise of 4.6% in the trailing four quarters. The Zacks Consensus Estimate for first-quarter earnings of 43 cents represents 10.3% improvement from the year-ago quarter. However, it moved south in the last 30 days.

Monster Beverage Corporation Price and EPS Surprise

 

Monster Beverage Corporation Price and EPS Surprise | Monster Beverage Corporation Quote

Let’s see how things are shaping up prior to the upcoming earnings release.

Factors Likely to Impact Q1

Monster Beverage has been witnessing solid momentum in the energy drinks business amid a challenging industry backdrop. This momentum is aided by the company’s wide range of energy drink brand offerings — including Monster Energy, Java Monster and Worx Energy among others. Additionally, optimism regarding its alliance with Coca-Cola’s bottlers globally, which broadened its distribution network, is aiding growth. Moreover, the company’s top line is poised to benefit from the product innovation strategy and regular product launches.

Monster Beverage expects the momentum in the energy drinks category to continue in the months ahead, courtesy of gains from Monster Energy, Monster Hydro and Mutant drinks brands. Moreover, additions to the Monster brand are expected to generate incremental sales and boost profitability. This should benefit the company’s top line in the first quarter.

Simultaneously, Monster Beverage’s solid international presence and plans for further expansion are working in its favor. Further, product innovation plays a significant role in the company’s success. Management expects its pipeline of innovation and product launches to aid sales and earnings in the to-be-reported quarter.

All these factors should continue to boost the company’s top line in the first quarter. Notably, the Zacks Consensus Estimate for revenues for the first quarter stands at $920.6 million, reflecting an increase of 8.2% from the year-ago quarter.

However, input cost inflation for aluminum cans and unfavorable product mix along with increased freight costs have been denting the company’s gross margin for a while now. This might continue to dent its margins in the to-be-reported quarter.

Zacks Model
 
Our proven model does not conclusively show that Monster Beverage is likely to beat earnings estimates in the first quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Monster Beverage has an Earnings ESP of -0.59% and a Zacks Rank #4 (Sell), which makes surprise prediction inconclusive.

We caution against stocks with a Zacks Ranks #4 or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Stocks with Favorable Combination

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

The Estee Lauder Companies Inc. EL has an Earnings ESP of +0.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Keurig Dr Pepper, Inc KDP has an Earnings ESP of +1.08% and a Zacks Rank of 3.

Campbell Soup Company CPB has an Earnings ESP of +1.80% and a Zacks Rank #3.

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