What: Shares of energy drink company Monster Beverage jumped 20% last month, according to S&P Capital IQ data.
Continue Reading Below
So what: While the stock crept up early in the month, most of February's gains came immediately after the fourth-quarter earnings release on Feb. 26. Monster had plenty of good news for its shareholders in that announcement, highlighted by a massive 65% jump in profits.
Monster managed that result by booking a huge drop in operating costs even as sales leaped higher by 12%. Those two happy trends combined to produce a 50% improvement in profitability: Net income margin grew by 7 percentage points to hit 21% of sales.
Monster also announced that its pending deal with beverage king Coca Cola will close in the second quarter of the year. "The Coca-Cola transaction continues to present a unique opportunity for us," said Monster CEO Rodney Sacks. "[Monster] will be bolstered by [Coca Cola]'s energy brands in a number of geographies, providing us with complementary product offerings in many countries, access to new geographies, as well as access to new channels, including vending and specialty accounts," according to Sacks.
Now what: In addition to that game-changing partnership, investors can look forward to other big improvements in Monster's business this year. The company should book strong international sales, particularly in Japan, which is becoming one of Monster's biggest markets. Meanwhile, new product launches like the Rehab Peach Tea and Energy Ultra Sunrise should help sales keep chugging along in the U.S.
Overall, Wall Street pros expect Monster to book 18% revenue gains in 2015. Profits are targeted to jump 22% to $3.37 per share, up from $2.77 per share in the 2014 fiscal year.
The article Why Monster Beverage Corp Stock Soared 20% in February originally appeared on Fool.com.
Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Monster Beverage. The Motley Fool owns shares of Monster Beverage and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on 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.
Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.