Shares of Monster Beverage (NASDAQ: MNST) fell as much as 13.2% on Thursday morning, following a combined earnings and revenue miss in the fourth quarter of fiscal year 2017. As of 12:15 p.m. EST, the energy drink specialist's stock had recovered slightly to an 11.7% drop.
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In the fourth quarter, Monster's sales rose 7.5% year over year to land at $810 million. Analysts had been expecting something more like $843 million. On the bottom line, unadjusted earnings increased 17% to $0.35 per diluted share. Here, the Street was looking for $0.37 per share.
The evolving distribution partnership with Coca-Cola continued to drive sales growth in the face of global headwinds for the sweetened beverage market. Top-line revenue was held back by Chinese bottlers working through some existing inventory.
Monster and Coke are still working out some kinks in their worldwide energy drink distribution efforts, making the company's quarter-by-quarter results somewhat unpredictable. At this point, Monster hasn't delivered a positive earnings surprise since the first quarter of 2016. The stock has still delivered a market-beating 32% return over the last 52 weeks -- a period including four earnings misses and today's big drop.
Several analysts defended Monster Beverage after this disappointing report, calling the stock a buy since the misses were related to simple shipment shifts from one quarter to another. Macquarie analyst Caroline Levy described the company's wobbly sales this way: "As we have seen over the years, very often a bad quarter is followed by a good one, and we are comforted to see consumer takeaway remains healthy."
Takeaway is a technical term in the food sector, essentially referring to retail sales. I would agree with Levy and others that this sudden plunge looks like a nice buy-in window for an exciting growth stock with plenty of international expansion ahead of it.
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