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Why Monster Beverage Stock Popped Today

By Steve Symington - Mar 2, 2017 at 11:44AM

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The energy drink specialist ended 2016 on a high note. Here's what investors need to know.

What happened

Shares of Monster Beverage (MNST -3.61%) were up 14% as of 10:40 a.m. EST Thursday after the energy- and fruit-drink company announced strong fourth-quarter 2016 results.

So what

Quarterly net sales increased 16.8% year over year to $753.8 million, primarily driven by a 17% increase in the company's flagship Monster Energy Drinks segment, to $684.4 million. Net sales for the smaller strategic brands business, which includes various energy drink brands acquired through a strategic partnership with Coca-Cola in 2015, grew 6.9% to $64.9 million. Other segment net sales, including certain American Fruits & Flavors products sold to independent third parties, were $4.7 million.

On the bottom line, that translated to 24.7% growth in reported net income, to $172.9 million, and a 32.6% increase in net income per share, to $0.30. However, earnings were also reduced by $46.3 million, or $0.05 per share, due to distributor termination expenses incurred during the quarter, bringing adjusted net income to $0.35 per share. On average, analysts were looking for lower adjusted net income of $0.30 per share on revenue of just $723.9 million.

Monster Beverage Juice Monster Cans

Image source: Monster Beverage.

Now what

Monster Beverage CEO Rodney Sacks elaborated: "We are pleased to report continued progress on the strategic alignment of our distribution system with Coca-Cola bottlers, both domestically and internationally. In the United States, we continue to see improvements in the quality of our distribution, particularly in the food service channel, and we transitioned distribution of Monster Energy drinks to the Coca-Cola bottlers in Wisconsin early in January 2017."

Sacks further noted the company has already transitioned distribution of its namesake drinks to Coke bottlers in Brazil, Costa Rica, and Panama, and continued to implement launches across China during the fourth quarter. Monster also plans to keep expanding in the China, Nigeria, and other countries throughout 2017, including a relaunch in India. 

Finally, with its previous share repurchase programs now exhausted, on Feb. 28, 2017, Monster's board approved a new repurchase program of up to $500 million in common shares.

This was an undeniably strong quarter from Monster Beverage as the company relentlessly expands its presence worldwide, so it's no surprise to see investors aggressively bidding up Monster Beverage stock today.

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