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Here's Why Monster Beverage Stock Is Sparkling Today

By Anders Bylund – May 8, 2020 at 11:53AM

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The energy drink maker posted strong first-quarter results, and management expects limited damage from the ongoing COVID-19 health crisis.

What happened

Shares of energy drink giant Monster Beverage (MNST -1.58%) traded 6.5% higher at 11:05 a.m. EDT Friday. The company published a solid first-quarter report on Thursday night, along with an optimistic analysis of how Monster is dealing with the COVID-19 crisis.

So what

Monster's first-quarter sales rose 12% year over year to $1.06 billion, slightly ahead of analyst projections for $1 billion. Earnings landed at $0.52 per share, up from $0.48 per share in the year-ago period. Your average analyst had expected earnings to stay flat.

On the earnings call, CEO Rodney Sacks said that he tested positive for COVID-19 in March but has made a full recovery, and that his company is going through a similar experience.

The health crisis had no significant effect on the first-quarter results but the second quarter started out with a 22% year-over-year decrease in gross sales due to lower foot traffic in important energy-drink retail locations such as gas stations and convenience stores.

"We're optimistic for improvement once the COVID-19 pandemic subsides," Sacks said. "We believe that we will be able to navigate through the challenges ahead as a result of the COVID-19 pandemic and hope that this unfortunate situation will resolve itself in the not-too-distant future."

A can of Monster Energy resting on a bed of ice cubes.

Image source: Anders Bylund.

Now what

Monster made the best of its low share prices in the first quarter by repurchasing 10.5 million shares, worth $579 million. The company also continued to execute its global expansion plans, launching new drink flavors in places like Australia, Belgium, Brazil, and China. Even the domestic market saw some new Monster names in early 2020, including fresh flavors in the Monster Ultra and Java Monster product lines. Monster remains a healthy growth stock for the long haul, despite the upcoming second-quarter revenue impact from the coronavirus crisis.

Anders Bylund 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.

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