US: Monster Beverage's earnings miss not a long-term concern - analyst

By | 9 August 2012

Monster's miss on Q2 earnings estimates was down to a slow June, but its ability to grow internationally remains "substantial", according to an analyst.

The California-based energy drinks group reported a sharp rise in net profits and sales yesterday. However, its share price took a hit in after hours trading, down by 19% to US$55.38 per share, as it missed estimates for sales growth.

But analysts Stifel Nicolaus said it believes the dip is "more a function of timing than materially slowing end-demand". 

Another reason, it suggested, was due to "product damage associated with the roll-out into Japan and Korea, that will normalise in time".

In international markets,  Monsters performed well in Q2 as sales rose by 50% to $153.4m. Stifel Nicolaus was encouraged by this. "We believe the runway for international growth is substantial, as Red Bull’s 2011 non-US sales were 15x Monster’s international sales and growing double-digits more than 20 years after the product’s introduction," it said.

The note added: "While Monster's shares are likely to be pressured near term, given concerns regarding slowing sales growth, we continue to believe the company can achieve a mid-teens sales CAGR through 2015, resulting from continued US share gains, innovation, and international expansion."

Expert analysis

Monster Beverage Corporation: Consumer Packaged Goods Company Profile, SWOT & Financial Report

Canadean's "Monster Beverage Corporation: Consumer Packaged Goods Company Profile, SWOT & Financial Report" contains in depth information and data about the company and its operations. The profile contains a company overview, business description, competitive benchmarking, SWOT analysis, key facts, information on products and services, key Employee biographies, details of locations and subsidiaries, plus information on key news events affecting the company.

Sectors: Company results, Soft drinks, Water

Companies: Red Bull

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