Energy drink company Monster Beverage (NASDAQ:MNST) missed analysts' expectations in Q2 CY2024, with revenue up 2.5% year on year to $1.90 billion. It made a GAAP profit of $0.41 per share, improving from its profit of $0.39 per share in the same quarter last year.
Is now the time to buy Monster? Find out by accessing our full research report, it's free.
Monster (MNST) Q2 CY2024 Highlights:
- Revenue: $1.90 billion vs analyst estimates of $2.01 billion (5.6% miss)
- EPS: $0.41 vs analyst expectations of $0.46 (11% miss)
- Gross Margin (GAAP): 53.6%, up from 52.5% in the same quarter last year
- Market Capitalization: $52.94 billion
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, said, “The energy drink category in the United States and in certain other countries experienced lower growth rates in the second quarter. Retailers have reported a reduction in convenience store foot traffic and we have seen a shift at retail towards more mass and dollar channels. Other beverage and consumer packaged product companies have also seen a tighter consumer spending environment and weaker demand in the quarter.
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ:MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Beverages and Alcohol
These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales Growth
Monster is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 12.8% over the last three years was solid for a consumer staples business.
This quarter, Monster's revenue grew 2.5% year on year to $1.90 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 10.6% over the next 12 months, an acceleration from this quarter.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefitting from the rise of AI, available to you FREE via this link.
Operating Margin
Operating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Monster has been a well-oiled machine over the last two years. It demonstrated elite profitability for a consumer staples business, boasting an average operating margin of 27.4%. This result isn't surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Monster's annual operating margin might have seen some fluctuations but has generally stayed the same over the last two years, highlighting the consistency of its business.
This quarter, Monster generated an operating profit margin of 27.7%, in line with the same quarter last year. This indicates the company's cost structure has recently been stable.
Key Takeaways from Monster's Q2 Results
We struggled to find many strong positives in these results. Its revenue unfortunately missed analysts' expectations and its EPS missed Wall Street's estimates. Overall, this was a mixed but overall mediocre quarter for Monster. The stock traded down 8.4% to $46.30 immediately after reporting.
Monster may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.