You won't find many stocks with better long-term performance than Monster Beverage (NASDAQ:MNST). The innovative beverage company played a vital role in creating a whole new category of drinks, and it has held onto its leadership role in the energy-drink space for years. Yet as Monster grew from a tiny, fast-growing small-cap stock to a big player in the beverage business, shareholders have had to get used to seeing growth rates decline and opportunities for significant expansion become more difficult to find.

Coming into Wednesday's second-quarter financial report, Monster Beverage investors still wanted to see double-digit growth rates in sales and profits, and the company was able to deliver on that score. Yet Monster's numbers also reveal some ongoing areas in which it hasn't yet found permanent solutions to maximize its full potential. Until it does, some investors won't be satisfied even with solid performance.

Promotional material showing six different Monster Energy can designs.

Image source: Monster.

The latest from Monster Beverage

Monster Beverage's second-quarter results were very much in line with expectations. Net sales were higher by 13% to $1.02 billion, matching the consensus forecast among those following the stock. Similarly, net income climbed 21% to $270.1 million, matching last quarter's growth rate. The resulting earnings of $0.48 per share topped what investors had expected to see by $0.01 per share.

As we've seen before, Monster's legacy energy drink division was much stronger than some of its other businesses. For the core unit, sales were higher by 14%. By contrast, the company saw a 7% decline in revenue in its strategic brands division, which is where Monster reports the results of the brands that it got from Coca-Cola (NYSE:KO) as part of their broader strategic partnership. Even when you account for some revisions related to changes in accounting rules, strategic brands only managed a 1.5% rise, showing the relative lack of importance for the former Coke part of Monster's portfolio. Other revenue was higher by 7%, contributing just a tiny amount to overall gains.

International growth played an outsized role for Monster, which saw an 18.5% rise in sales overseas. Higher promotional activity once again hit gross margin hard, causing a drop of more than three percentage points to 61.1%. Among other items, Monster said that higher prices for aluminum cans played a role in margin deterioration. Case volume soared 13% to 110 million, but net sales per case were down $0.10 to $9.17.

Can Monster Beverage move forward?

CEO Rodney Sacks celebrated Monster's milestone in seeing quarterly revenue top the $1 billion mark. "We continue to progress our strategic alignment with the Coca-Cola system bottlers," Sacks noted as he did last quarter, and the CEO pointed to product launches in areas like Belarus, Tanzania, Uruguay, and key cities in India as helping to drive future growth.

Monster sees plenty of further growth potential. Arkansas should complete its transition to Coca-Cola bottlers this quarter, and the July launch of Monster Energy in Ecuador is just the first of several international launches that the company is planning for the remainder of 2018.

Stock repurchase activity sped up for Monster. Buybacks added up to 10.6 million, with Monster paying $553.2 million for an average share price of $52.42. With another brand new $500 million authorization for further buybacks, Monster investors can expect the rapid pace of repurchases to continue into the future.

Yet Monster Beverage shareholders haven't been satisfied with how the company has done lately, and today was no different, with the stock dropping 4% in after-hours trading following the announcement. To move forward more aggressively, Monster needs to figure out how to get more value out of the legacy Coke brands in its portfolio while reawakening faster growth rates for its most popular Monster brands. If it can do so, then the rest of 2018 could bring a clearer recovery for Monster Beverage's business.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Monster Beverage. The Motley Fool has a disclosure policy.