The stock market slid for the third consecutive session on Thursday after President Trump announced his administration will impose tariffs on steel and aluminum imports next week. In particular, investors worried that the controversial move could start a trade war that would result in international retaliation, and ultimately negate the country's recent economic strength.
Today's stock market
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Industrials were among the hardest hit today, with the Industrial Select Sector SPDR Fund (NYSEMKT:XLI) falling 2%. Meanwhile, oil stocks rebounded somewhat after yesterday's steep decline, with the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) up 1%.
Monster's results strike fear in the market
Shares of Monster Beverage plunged 14.4% today after the energy-drink specialist reported disappointing fourth-quarter 2017 results. Revenue climbed 7.5% year over year to $810.4 million, which translated to a 17.5% increase in net income per share to $0.35. But analysts, on average, were expecting earnings of $0.37 per share on significantly higher revenue of $843 million.
To explain its relative shortfall, Monster pointed to the negative effect of inventory reductions by certain international distributors.
Nonetheless, Monster CEO Rodney Sacks focused on the positive, noting the company launched its flagship Monster Energy brand drinks in multiple smaller countries during the quarter through its strategic alignment with Coca-Cola system bottlers. Monster Energy will also capitalize on incremental growth opportunities with additional launches in 2018, including in Argentina, Armenia, Belarus, and Tanzania in the first quarter. And the company looks forward to introducing new brands such as Caffe Monster, an energy coffee drink, and Muscle Monster, an energy shake targeted toward athletes.
Even so, it's hard to blame the market for bidding down Monster Beverage stock after this underwhelming report. Until Monster can show signs that its future launches can reaccelerate its long-term growth, I suspect its shares will remain under pressure.
Hostess' delicious quarter
Shares of Hostess Brands soared 15.4% today after the baked goods leader delivered delectable fourth-quarter results. Revenue climbed 9.7% to $196.2 million, including Hostess' best organic growth rates of the year, which translated to 13.3% growth in adjusted earnings per share to $0.17. Both figures arrived comfortably ahead of consensus expectations, which called for earnings of $0.14 per share on revenue of $194 million.
In particular, Hostess credited the recent introduction of its new Bakery Petites premium snack line, which single-handedly contributed around 3.1% of its net revenue gains. The remainder of its growth was driven by other new products including Chocolate Cake Twinkies, White Fudge Ding Dongs, and Golden CupCakes.
"We are pleased with our strong finish to the year," stated CEO Bill Toler. "We were able to capitalize on the momentum provided by our robust product innovation and continued distribution gains to increase our market share."
What's more, Hostess looks forward to new growth opportunities in the breakfast market, driven by its recent acquisition of the Big Texas and Cloverhill brands.
As such, for the full year of 2018, Hostess anticipates adjusted earnings per share of $0.65 to $0.70. By comparison, Wall Street was expecting 2018 earnings near the low end of that range.
Between Hostess' better-than-expected end to 2017, its optimistic view for the year ahead, and with shares down more than 20% over the past year, it's no surprise to see the stock rebounding in response today.