Image source: Monster Beverage.

For decades, Coca-Cola (NYSE:KO) ruled the beverage industry with its namesake cola drink and a host of other carbonated options. Yet over the past 10 years or so, there's been a sea change in the industry, and Monster Beverage's (NASDAQ:MNST) energy drinks have come into the spotlight as a preferred choice for many consumers. Yet coming into its third-quarter financial report on Thursday, Monster Beverage is in the rare position of having to rebound from a poor showing in its previous quarterly results, and the pressure is on for the company to return to its more typical growth trajectory. Let's take an early look at what investors should expect from Monster Beverage and whether the stock can return toward its all-time highs from earlier this year.

Stats on Monster Beverage

Analyst EPS Estimate

$0.82

Change From Year-Ago EPS

17.1%

Revenue Estimate

$742.39 million

Change From Year-Ago Revenue

16.7%

Earnings Beats in Past 4 Quarters

2

Data source: Yahoo! Finance.

Can Monster get its mojo back?
Investors have had a tough time reconciling the impact of Monster Beverage's second-quarter slowdown on its earnings, having reduced their third-quarter projections by $0.07 per share and cutting full-year forecasts by $0.25 per share. The stock has fallen from its past record highs, down 10% since late July.

Monster's second-quarter results crushed the confidence that many investors had had in the energy-drink company. Growth came to a near standstill, with both revenue and net income rising by about 1%. For a company that has routinely posted double-digit percentage increases, that departure from the norm was shocking, and although the company's deal with Coca-Cola to trade energy and nonenergy drink brands between them had an impact on Monster's financials, some of the fundamentals of the energy-drink business itself were mixed. For instance, even though sales volumes rose, average prices fell, weighing on Monster's ability to increase overall revenue.

Perhaps in response to its share-price declines, Monster chose to approve a new stock repurchase program. In September, Monster's board authorized up to $500 million in share buybacks under the new program, having completed its previous $200 million authorization. The impact will likely be minimal, given that $500 million is just over 2% of Monster's market capitalization, but it does demonstrate the company's confidence in its stock at current levels.

From a fundamental standpoint, Monster got some positive news after the end of the third quarter. In late October, fast-food giant McDonald's (NYSE:MCD) is testing sales of Monster beverages in about 20 of its stores. The test could lead to a closer relationship between the two companies in the future, and having exposure at the chain's restaurants would not only directly improve Monster's results but also increase brand awareness more generally and increase sales from existing distribution channels as well.

Yet the bigger question Monster faces is whether competitors will eventually take away some of Monster's business. The company has effectively neutralized Coca-Cola with its partnership with the beverage giant, but Coca-Cola's major rival in the soft-drink industry as well as key players in the coffee business are taking their own stabs at producing energy drinks of their own. Monster has an edge in having been a first-mover, and its brand-name recognition is synonymous with its namesake products. How durable those competitive advantages will be, though, remains to be seen.

In the Monster Beverage report, investors will need to focus closely on how well the brand-swap with Coca-Cola has gone. With new brands among its assets and with some old longtime holdings now moved to Coca-Cola, Monster's report will look different than it has in the past. If trends in the beverage industry continue, then Monster Beverage will be well-positioned to profit from rising demand for the types of drinks it is famous for making.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Monster Beverage. The Motley Fool has the following options: long January 2016 $37 calls on Coca-Cola, short January 2016 $43 calls on Coca-Cola, and short January 2016 $37 puts on Coca-Cola. The Motley Fool recommends Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.