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Monster Beverage Drops on Earnings, but WhiteWave Foods Pops

Stocks spent most of today's session above water with the Dow Jones Industrial Average  (DJINDICES: ^DJI  ) testing intraday record highs at one point, but an afternoon sell-off led the S&P 500 and Nasdaq to a negative finish, while the blue chips finished 32 points, or 0.2% higher. No major news item drove the market today as investors responded to further remarks from Fed Chairwoman Janet Yellen, and a drop in initial unemployment applications.

New jobless claims fell to 319,000 last week from a previous mark of 345,000, beating estimates at 325,000. While the weekly number tends to be volatile, the drop seems to indicate strong employment growth continuing from April into May. Also favorable was news that the four-week moving average in continuing unemployment claims hit a low not seen since December 2007, at 2.715 million, showing the job market is on track to return to pre-recession levels.

In her second day in a row of speaking before Congress, Yellen again defended the central bank's actions to stimulate the economy and said second-quarter growth looked solid. She also said that the committee has not yet made a decision on the Fed's portfolio, which has grown from $800 billion to $4.5 trillion after years of bond buying, and that it could take five to eight years to reduce it to pre-crisis levels.

After hours, shares of Monster Beverage  (NASDAQ: MNST  ) were scaring away investors, falling 3.5% after reporting earnings. The energy-drink maker beat estimates on the bottom line with a per-share profit of $0.55 against the consensus at $0.49, but sales came in short, increasing 10.7%, to $536.1 million. Analysts had expected revenue of $541.9 million. Operating margin shot up 560 basis points in the quarter to 27.8% as the company avoided $8.3 million in distributor termination expenses and saw selling expenses plummet 280 basis points. Monster was once under scrutiny for the safety of its beverages, but the company seems to have put those concerns in the past as CEO Rodney Sacks reminded investors that more than 10 billion Monster drinks have been safely consumed in the last 12 years. With that storm now behind it, the stock looks like a much safer investment, even with moderating growth.

Staying in the food and beverage industry, shares of WhiteWave Foods  (NYSE: WWAV  ) finished up 8% after a strong earnings report this morning. The parent of Silk soy milk and other organic products said sales jumped 36%, to $830.2 million, driven by its acquisition of Earthbound Farms earlier in the quarter. That figure was much better than the $786.9 million Wall Street expected. WhiteWave also posted earnings of $0.22 per share, ahead of estimates at $0.19, and lifted its full-year guidance above expectations to $0.95-$0.98. Finally, the company said it plans to launch a joint venture in China by the end of the year, which should drive profits further. Propelled by the joint venture, tailwinds from growth in organics and its recent acquisition, shares could easily move higher.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

9/4/2015 10:29 AM
^DJI $16167.05 Down -207.71 -1.27%
MNST $135.46 Down -0.18 -0.13%
Monster Beverage CAPS Rating: ***
WWAV $45.60 Up +0.19 +0.42%
WhiteWave Foods CAPS Rating: ****