Factors to Affect Monster Beverage's (MNST) Q3 Earnings

Monster Beverage Corporation MNST is expected to report third-quarter 2022 results on Nov 3, after the closing bell. The beverage company is anticipated to have witnessed revenue growth in the to-be-reported quarter.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.65 billion, indicating growth of 16.7% from that reported in the year-ago quarter. The consensus estimate for earnings of 58 cents per share suggests a decline of 7.9% from 63 cents reported in the year-ago quarter. The consensus mark has moved down 3.3% in the past 30 days.

In the last reported quarter, the company posted a negative earnings surprise of 25%. It has delivered a negative earnings surprise of 9.1%, on average, in the trailing four quarters.

Monster Beverage Corporation Price and EPS Surprise

Monster Beverage Corporation price-eps-surprise | Monster Beverage Corporation Quote

Key Factors to Note

Monster Beverage has been witnessing inflationary operational costs for aluminum cans, shipping, freight and other inputs. Elevated ingredients and other import costs, including secondary packaging materials and increased co-packing fees, are likely to have been concerning. These are likely to have dented the company’s margins in the to-be-reported quarter.

The company’s bottom line is expected to have been impacted by the global supply-chain challenges, including the lack of adequate shipping containers and port congestion. This, in turn, is likely to have led to shortages of certain ingredients and finished products. Also, the company has been reeling under a significant rise in distribution expenses, including increased fuel, freight and warehousing costs.

However, Monster Beverage has been undertaking actions to navigate through the challenges by decreasing its reliance on imported cans. The company has been purchasing aluminum cans from local sources in the United States and EMEA. It has also rebuilt and increased finished product inventory levels across the United States and EMEA to reduce the excessive cost of long-distance freight to meet consumer demand.

MNST has been implementing pricing actions to overcome the ongoing cost pressures. On its last reported quarter’searnings call management announced implementing price increases in certain international markets in the second half of 2022. It said that some of these would be in addition to price increases implemented earlier this year in order to mitigate inflationary cost pressures.

Continued strong demand for the energy drinks category, driven by growth in Monster Energy, and strength in Strategic and Affordable energy brands, remains a major driver. The company remains committed to product launches and innovation to boost growth. Product launches across the Monster family are likely to have boosted the company's overall performance in the to-be-reported quarter.

Also, it remains on track to launch a number of products and product lines in the domestic and international markets throughout 2022. This is expected to have aided revenues in the third quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Monster Beverage this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Monster Beverage has a Zacks Rank #4 (Sell) and an Earnings ESP of -2.92%.

Stocks With Favorable Combination

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

e.l.f. Beauty ELF has an Earnings ESP of +7.58% and it currently sports a Zacks Rank of 1. The company is likely to register top-line growth when it reports third-quarter 2022 results. The consensus mark for ELF’s quarterly revenues is pegged at $105.7 million, which suggests 15.1% growth from the figure reported in the prior-year quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus mark for e.l.f. Beauty’s quarterly earnings has moved up by a penny in the past 30 days to 15 cents per share. The consensus estimate for ELF’s third-quarter earnings suggests a decline of 28.6% from the year-ago quarter’s reported figure.

Kellogg's K currently has an Earnings ESP of +2.27% and a Zacks Rank #3. K is likely to register top-line growth when it reports the third-quarter 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.8 billion, which suggests growth of 4% from the figure reported in the prior-year quarter.

However, the Zacks Consensus Estimate for Kellogg's quarterly earnings has been unchanged in the past 30 days at 96 cents per share, suggesting a decline of 10.1% from the year-ago quarter’s reported number. K has delivered an earnings beat of 13.27%, on average, in the trailing four quarters.

Hershey HSY currently has an Earnings ESP of +2.02% and a Zacks Rank of 3. The company is expected to register top-line growth when it reports the third-quarter 2022 numbers. The Zacks Consensus Estimate for HSY’s quarterly revenues is pegged at $2.6 billion, which suggests growth of 11% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Hershey’s quarterly earnings has moved up by a penny in the past seven days to $2.07 per share. However, the consensus estimate for HSY suggests a 1.4% decline from the year-ago reported number. HSY has delivered an earnings beat of 8.7%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.