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Monster Misses Q2 Earnings Estimates; Revs

Zacks Equity Research

Monster Beverage’s (MNST) second quarter 2013 adjusted earnings of 62 cents per share missed the Zacks Consensus Estimate of earnings by 3%. However, earnings increased 4.6% year over year due to a mid-single digit increase in top line.

During the quarter, Monster Beverage’s net sales rose 6.5% year over year to $630.9 million. However, net sales also missed the Zacks Consensus Estimate of $643 million by 1.0% due to soft sales in its energy drinks, particularly the Monster Energy brand. Monster Beverage like other beverage giants, PepsiCo, Inc (PEP) and The Coca Cola Company (KO) are seeing sluggish sales due to changing consumer preferences and increasing health consciousness.

Gross profit increased 9.0% in the quarter to $336.3 million. Gross margin grew 150 basis points to 53.3% on the back of a favorable mix. A significant percentage of sales were from high margin brands like Ultra Zero, Ultra Blue and Rehab Pink Lemonade.

Operating income rose 5.7% to $179.4 million in the quarter. Operating margin declined 20 basis points in the quarter, due to increase in litigation expenses and unfavorable foreign transactions.

Monster Beverage had cash and cash equivalents of $283.8 million as of Jun 30, 2013, compared to $222.5 million as of Dec 31, 2012. The board of directors authorized a new share repurchase program worth $200 million of outstanding common stock in the quarter.  

Monster Beverage carries a Zacks Rank #3 (Hold).

Another consumer staples stock that is currently doing well is Dole Food Company Inc. (DOLE), carrying a Zacks Rank #1 (Strong Buy).

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