Dj Monster Beverage Corporation, Inst Holders, 4Q 2024 (Mnst)

Monster Beverage Corporation MNST is expected to report fourth-quarter 2024 results on Feb. 27, after the closing bell. The beverage company is anticipated to have witnessed revenue and earnings growth.

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The Zacks Consensus Estimate for revenues is pegged at $1.79 billion, indicating growth of 3.6% from the figure reported in the year-ago quarter. The consensus estimate for earnings of 40 cents per share implies a rise of 5.3% from the year-ago quarter’s actual. The consensus mark has been unchanged in the past 30 days.

In the last reported quarter, the company registered a negative earnings surprise of 4.8%. It has delivered an average negative earnings surprise of 5.2% in the trailing four quarters.

Monster Beverage Corporation Price and EPS Surprise

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

What the Zacks Model Unveils for MNST

Our proven model does not conclusively predict 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 odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Monster Beverage has an Earnings ESP of -0.35% and a Zacks Rank of 4 (Sell).

Key Factors to Note Ahead of MNST’s Results

Monster Beverage’s fourth-quarter results are expected to reflect several challenges, impacting its financial performance and growth prospects. The energy drink category has experienced decelerated growth in the U.S. convenience channel. This trend is largely attributed to a tighter consumer spending environment affecting certain income groups and weaker overall demand. The persistence of this trend is expected to have weighed on the company’s top and bottom lines in the to-be-reported quarter.

MNST has been facing elevated operating expenses, driven by higher costs associated with sponsorships, endorsements, payroll and intellectual property claims. The elevated expenses have been resulting in higher SG&A expenses and soft margins. These expenses may have continued to weigh on the company’s overall profitability in the fourth quarter.

Fluctuating foreign exchange rates have also hindered Monster Beverage’s performance, adding to the complexity of maintaining profitability in international markets.

However, the company’s growth initiatives could play a pivotal role in reversing its recent woes. It continues to drive its performance through its extensive portfolio of energy drink brands, catering to diverse consumer preferences with offerings like Monster Energy, Monster Rehab, Java Monster and Monster Hydro. Innovations such as Monster Hydro Super Sport and Monster Dragon Tea further enhance its market appeal.

Product innovation plays a significant role in the company's success. Monster Beverage has been committed to product launches and innovation to boost growth. The ongoing innovation plans and new products are expected to have aided its performance in the to-be-reported quarter.

Additionally, MNST has continued to benefit from its pricing actions across various regions to negate the impacts of rising commodity costs and inflation. Management has been reviewing opportunities for price increases internationally. The company is making a roughly 5% price increase on its core brands and packages, effective Nov. 1, 2024, in the United States.

On the last reported quarter’s earnings call, management highlighted that it was continuing to monitor opportunities for further pricing actions in its international markets in the fourth quarter. Effective pricing actions are expected to have boosted the top line to some extent in the fourth quarter.

MNST’s Valuation Picture

From a valuation perspective, Monster Beverage looks expensive, trading at a premium relative to industry benchmarks. With a forward 12-month price-to-earnings ratio of 27.44X, which is above the Beverages – Soft Drinks industry’s average of 18.58X, the stock’s valuation suggests caution for investors seeking exposure to the sector. Meanwhile, the company trades at a significant discount on historical benchmarks, with a five-year high of 44.73X, suggesting room for growth.

The recent market movements show that MNST shares have lost 5.3% in the past three months against the industry's 1.5% rise.