Monster Beverage (MNST) Q4 Earnings: Is A Beat In Store?

Monster Beverage Corporation (NASDAQ:MNST) is slated to release fourth-quarter 2017 numbers on Feb 28, after the closing bell.

Last quarter, the company’s earnings met analysts’ expectation. The company managed to surpass the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 4.33%.

Let’s discuss the factors that are likely to drive Monster Beverage’s fourth-quarter 2017 results.

Factors at Play

Product innovation plays a major role in driving revenues. The company’s net sales grew 11.5% year over year in the first nine months of 2017. The upside can be attributed to a wide portfolio of energy drink brands that has been experiencing solid demand in domestic and international markets. The trend is expected to continue in the upcoming quarter.

Sales in the Monster Energy Drinks segment improved 11.6% in the first nine months of 2017. The segment accounts for 90% of total sales. Due to growing health awareness, consumers are particularly cautious about the use of artificial sweeteners and high sugar content products. As a result, the broader carbonated soft drinks (CSD) category has been suffering for the last few years. However, energy drinks constitute one of the few sub-categories that continue to gain momentum. Therefore, a portfolio based on energy drinks will drive the company’s top line.

Notably, the company's strategic deal with notable brands bolstered its portfolio and strengthened presence in the international energy drinks market. The Strategic Brands segment, which includes the various energy drink brands acquired from The Coca-Cola Company (NYSE:KO) , improved more than 10% in the first nine months 2017. The trend is expected to continue in the to-be-reported quarter.

However, Monster Beverage’s sales and profits have been dented significantly by unfavorable currency translations. Net changes in foreign currency exchange rates affected net sales in the Monster Energy Drinks segment by approximately $13.4 million in the first nine months of 2017.

Distributor termination expenses are likely to dampen the company’s profits to some extent. It has been transitioning from third-party distributors to Coca-Cola’s distribution network following a strategic deal.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $841.5 million, reflecting an increase of 11.6% year over year. Meanwhile, the consensus estimate for earnings is 37 cents, implying 5.7% year-over-year growth.

Quantitative Model Prediction

Monster Beverage has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — which increases the odds of an earnings beat.

Zacks ESP: Monster Beverage has an Earnings ESP of +3.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Monster Beverage carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Monster Beverage Corporation Price and EPS Surprise

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

Peer Releases

The Coca-Cola Company’s comparable earnings in the fourth quarter of 2017 were 39 cents per share, surpassing the Zacks Consensus Estimate of 38 cents. The same improved from the year-ago quarter’s level of 37 cents, courtesy of ongoing productivity efforts.

PepsiCo (NASDAQ:PEP) reported fourth-quarter 2017 earnings per share of $1.31, beating the Zacks Consensus Estimate of $1.30 and increasing 9% year over year.

Dr Pepper Snapple Group’s (NYSE:DPS) fourth-quarter 2017 earnings were in line with the Zacks Consensus Estimate, while revenues lagged the same.

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