Monster Beverage (MNST) Up 11% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Monster Beverage Corporation MNST. Shares have added about 11% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Monster Beverage Q1 Earnings, Revenues Top Estimates

Monster Beverage reported first-quarter 2017 results, wherein both earnings and revenues surpassed expectations. The company also came up with higher sales and impressive margins.

Monster Beverage's first-quarter adjusted earnings of $0.33 per share beat the Zacks Consensus Estimate by a penny. Earnings also increased 26.9% year over year on higher sales.

Sales Detail

Net sales of $742.1 million surpassed the Zacks Consensus Estimate of $741.4 million by 0.1%. The figure improved 9.1% year over year.

Foreign currency had an unfavorable impact of $3.7 million on quarterly net sales.

Net sales outside the U.S. increased 28% to $190.9 million in the quarter on a year-over-year basis.

Quarterly Segment Details

Monster Energy Drinks Segment: Net sales at the segment, comprising Monster Energy drinks as well as Mutant Super Soda drinks, were $668.6 million, up 7.5% year over year.

Strategic Brands segment: This segment includes brands acquired from Coca-Cola. Net sales at the segment increased 16.4% to $68 million in the quarter.

Other: Net sales for the company's Other segment, which includes some products of American Fruits & Flavors sold to independent third parties, were $5.5 million in the quarter under review. Notably, the segment had reported no net sales in the prior-year quarter.

Margins

First-quarter 2017 gross margin rose 260 basis points (bps) to 64.8%. Operating expenses increased 28.6% year over year to $216.6 million. Operating income in the quarter was $264.3 million, up 3.8% year over year.

Financials

Monster Beverage ended the quarter with cash and cash equivalent of $576.3 million as of Mar 31, 2017, compared with $377.6 million as of Dec 31, 2016.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Monster Beverage Corporation Price and Consensus

VGM Scores

At this time, Monster Beverage's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'F'. Charting a somewhat similar path, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth investors based on our style scores.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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