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What to Expect from Monster Beverage’s Q4 Earnings

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Dec. 4 2020, Updated 10:53 a.m. ET

Growth in earnings

Monster Beverage (MNST) exceeded analysts’ earnings expectations in the second and third quarters of 2018, and earnings were in line with the analysts’ consensus estimate in the first quarter. The company’s adjusted EPS grew by 25.0% to $0.50 in the third quarter of 2018 and surpassed analysts’ expectations of $0.46. Higher sales and lower taxes drove Monster Beverage’s third-quarter earnings.

Monster Beverage’s gross margin fell to 59.8% in the 2018 third quarter compared to 62.6% in the 2017 third quarter due to a rise in input costs, the adoption of an accounting standard, increased promotional allowances, an unfavorable domestic product sales mix, and an unfavorable geographical margin mix. Monster Beverage’s operating margin declined to 33.4% in the 2018 third quarter compared to 34.9% in the 2017 third quarter due to higher wages, a rise in outbound freight costs and warehouse costs.

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Earnings expectations

Monster Beverage is scheduled to announce its fourth-quarter results after the financial markets close on February 27. Analysts expect Monster Beverage’s adjusted EPS to grow to $0.40 in the 2018 fourth quarter compared to $0.35 in the 2017 fourth quarter. The company’s 2018 adjusted EPS are expected to rise over 21% to $1.77. Monster Beverage’s earnings will likely benefit from higher sales and lower taxes, partially offset by higher costs. However, the company’s decision to raise the prices of certain products will likely mitigate the impact of higher costs.

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