Categories Analysis, Consumer, Retail

Monster Beverage stock falls on strained Coca-Cola deal, despite Q3 beat

Shares of Monster Beverage (MNST) fell sharply after it hinted at a crack in its relationship with rival and partner Coca-Cola Company (KO), triggering concerns of stiffer competition between the beverage makers in the coming months. Earlier, the company reported better-than-expected earnings and revenues for the third quarter, reflecting the consistent demand for its products.

Monster Beverage third quarter 2018 Earnings Infographic
Monster Beverage Corp. Q3 2018 Earnings Infographic

Adjusted earnings, excluding distributor termination expenses, rose 26% annually to $0.50 per share in the third quarter, beating analysts’ prediction. Reported profit was $267.7 million or $0.48 per share, higher than $218.7 million or $0.38 per share recorded a year earlier.

At $1.02 billion, net sales were 12% higher compared to the third quarter of 2017 and far above the consensus estimate. The top line was negatively impacted by the adoption of Accounting Standards Codification and commissions paid to Coca-Cola Company.

Adjusted earnings, excluding distributor termination expenses, rose 26% annually to $0.50 per share in the third quarter

Sales of the Monster Energy Drinks division rose 13%, while those of the Strategic Brands segment dropped 2.8%. Sales at the Other segment was up 26% compared to last year.

With competition intensifying in the local market, Monster Beverage is ramping up its expansion initiatives across all global markets. More international launches are in the pipeline this year and beyond.

“We continue to make progress in our strategic alignment with Coca-Cola system bottlers and have now fully transitioned Monster Energy from our former Anheuser-Busch distributors to Coca-Cola bottlers in the United States. In the third quarter of 2018, we transitioned Monster Energy in the remainder of Arkansas,” said CEO Rodney Sacks.

Monster Beverage Corp posts upbeat Q2 earnings

In the second quarter, the company registered a 24% growth in earnings to $0.48 per share, aided by robust sales at the Monster Drinks segment and lower income taxes. Total sales increased 12% to $1.00 billion in the June quarter.

Last month, Coca-Cola reported earnings of $0.58 per share on revenue of $8.26 billion for its third quarter, both surpassing Wall Street forecasts.

Monster shares have underperformed the S&P 500 index and Nasdaq since the beginning of the year when it lost about 12%. The stock dropped more than 10% in the pre-market trading Thursday, after closing the previous trading session higher.

 

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text

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