Why Monster Worldwide, Inc. Shares Tumbled Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Monster Worldwide  (NYSE: MWW  ) plunged more than 18% early Thursday after the company released weaker-than-expected first-quarter results.

So what: Quarterly revenue fell 7% year over year to $198 million, which translated to adjusted net income of $7 million, or $0.08 per share. Analysts, on average, were looking for adjusted earnings of $0.09 per share on sales of $200.86 million.

In addition, Monster Worldwide expects adjusted second-quarter earnings in the range of $0.07 to $0.11, compared to analysts' models that called for Q2 earnings of $0.12 per share on the same basis. 

Now what: To its credit, Monster's adjusted first-quarter earnings did arrive at the mid-point of its guidance, albeit with the help of $40 million in share repurchases at an average cost basis of $7.88 per share. As of March 31, 2014, there was also roughly $54 million remaining under Monster's existing $200 million share repurchase authorization.

Even so, and while Monster did see sequential revenue growth in its Careers businesses last quarter, I'd like to see Monster sustain earnings without relying on buybacks to meet its goals. Better yet, it'd be great to see Monster be able to profitably reinvest some of that money in its business or give investors a choice of where to put its excess cash by paying a dividend. For now, that's why I'm perfectly happy watching from the sidelines.

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  • Report this Comment On May 01, 2014, at 2:26 PM, FrankoJames wrote:

    I do not know much about this company, but the enterprise could make smaller can sizes and move into more healthy markets. I usually lose in everything to Monster drinkers, so nuff said.

  • Report this Comment On May 01, 2014, at 3:09 PM, FrankoJames wrote:

    Unlike the energy drink company of a similar name, which could always just make smaller can sizes of pop to compete with the likes of KO and PEP, Monster Worldwide, even with a slew of deals, has to indirectly and/or directly compete with LNKD, which is going to take away traffic from the flagstone store known as monster.com. Sorry if I posted my last comment to the wrong space. I am in a writing mood today with no real content to focus on. Fool on...

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