E Monster Energy: Has It Lost Its Roar?

The advertising and promotional machine at Monster Beverage (MNST ) is borderline genius, as the company is also moving heavily into the extreme sports space as the dominant sponsor/advertiser. With the investment from Coca-Cola (KO) that beverage company has morphed from a growth niche play, into a powerhouse distributor of energy drinks and tea.

The company’s strategy seems to be paying off with youth, as every college campus now seems to carry the product, and high school age teens drink the products as a status symbol. Perhaps this is because they have hundreds of up and coming legends in their respective sports touting the product and cashing in on increased sales by the month. Bands such as Halestorm, Shinedown, Five Finger Death Punch and 10 Years are involved with MonsterTV promotions, further appealing to a wide audience beyond the guy just looking for a "pick-me-up" at the convenience store.

That said, the stock has had a great run in the last five years, though it has been under pressure in recent months. The ‘monster’ growth of the company is now being tempered by fears that monster has lost its roar. Therefore, in this column, we will dive into the recently reported numbers out of the company to see if the growth is still present. Further, we offer our take on the stock in 2018.

Sales figure continue to impress

Net sales for the 2017 fourth quarter increased 7.5 percent to $810.4 million from $753.8 million in the same period last year. This is strong, and gross sales demonstrated equally impressive growth. Gross sales for the 2017 fourth quarter increased 10.1 percent to $934.8 million from $848.8 million for the same period last year.

It should be noted that currency exchange rates often wreak havoc on domestic companies with international shares, however in Q4, foreign exchange was positive. Favorable currency exchange rates increased net sales by approximately $7.3 million and gross sales by approximately $9.3 million in the 2017 fourth quarter. 

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