MNST

Coca-Cola Expanding Its Dominance; SodaStream in Play

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Coca-Cola (KO) has recently become a savvy asset manager, and we think recent moves speak volumes about the company’s strategy to retain dominance in the non-alcoholic beverage space for decades to come. Coca-Cola’s management is capitalizing on what we’d describe to be the ‘Hidden Advantage‘—something more commonly witnessed in activist dealings in which small initial stakes turn into large gains once news is made public. In February, for example, Coca-Cola scooped up 10% of Green Mountain at $74.98 per share (it subsequently increased its stake to 16%). With shares of Green Mountain (GMCR) now trading at ~$115 each, the deal for just a small portion of Green Mountain looks incredibly savvy—especially in the event Coca-Cola ends up buying Green Mountain … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Coca-Cola Remains Strong; Green Mountain Deal Shakes Up Beverage Industry

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Though many investors are focused on the relatively weak global volume performance in Coca-Cola’s (KO) fourth-quarter results, released February 18, we’re not worried about the beverage giant’s fundamental strength. Excluding the impact of structural changes, comparable currency-neutral net revenues advanced 4% in the period, while comparable currency-neutral operating income jumped 6%, in line with its long-term growth target. Comparable currency-neutral earnings per share jumped 7% in the fourth quarter, roughly in-line with the full-year pace. This isn’t terrible performance by any stretch of the imagination, and the company continues to achieve global value share gains in nonalcoholic ready-to-drink beverages. Coca-Cola’s cash flow from operations declined modestly during the year, but greater scrutiny with respect to capital spending facilitated free cash flow … Read more

Surveying the Cola Companies’ Third-Quarter Results

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Coca-Cola (KO) On Tuesday, Coca-Cola (click ticker for report: ) announced decent third-quarter results that showed global volume expansion and share gains in North America for both the sparkling and still-beverage categories. Though reported revenue declined 3% in the period, revenue – adjusted for structural changes and currency – advanced 4% in the quarter. Likewise, comparable currency-neutral operating income jumped 8%, driving comparable earnings per share growth of 4%. Free cash flow generation of $6.1 billion year-to-date represents 17% of sales. Coca-Cola Americas grew volume 1% in both the quarter and year to date, with North America volume up 2% and Latin America volume even in the quarter. Coca-Cola International grew volume 3% in both the quarter and year to … Read more

Monster Beverage Takes Market Share

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Health concerns and broader category demand headwinds couldn’t stop Monster Beverage (click ticker for report: ) from posting decent second quarter growth. Net sales increased 6.5% year-over-year to $631 million, slightly below consensus estimates, but still a solid number in our view. Earnings per share increased 4.6% year-over-year to $0.62, again falling slightly short of consensus estimates, but by no means terrible given some of the legal issues surrounding the company. Demand for Monster products isn’t experiencing the same robust growth as is it did years ago, but we are seeing the company outperform many of its peers. According to the data that management from Nielsen on the conference call, Monster’s comparable sales jumped 16.4% year-over-year during July at convenience … Read more

Lack of Cost Control and Demand Risk: The Story of Monster Beverage

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Earlier this week, energy drink producer Monster Beverage (click ticker for report: ) reported lackluster first quarter results due to lower sales growth and a lack of cost containment. Revenue was well below consensus expectations, growing just 7% year-over-year to $484 million compared to the last several quarters of double-digit revenue growth. Earnings fell 10% year-over-year to $0.37 per share, which failed to come close to the consensus estimate. According to Monster’s management, the entire energy drink industry experienced weak sales growth during the first quarter relative to the powerful double digit growth rates the industry has become accustomed to. What’s driving the weakness? It appears to be largely related to health issues. The FDA provides a report describing the negative … Read more

Health Concerns, Sales Weakness Hit Monster

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Amid the recent hubbub regarding the safety of its energy drinks, Monster Beverage (click ticker for report: ) reported mixed third quarter results Wednesday afternoon. The firm generated $542 million in revenue, 14% higher than the same period a year ago and slightly below consensus expectations. Earnings growth was disappointing, increasing just 7% year-over-year to $0.47 per share, considerably trailing consensus estimates. Gross margins at Monster Beverage tumbled during the quarter, falling 220 basis points year-over-year to 50.5%. The firm blamed heavy promotional spending, as well as increased shipping costs due to higher international sales. With aggregate international sales increasing 24%, and according to management, a very fickle Japanese customer that rejected several hundred cases, we find this excuse believable. … Read more

Coca-Cola Continues to Grow Steadily

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Global beverage giant Coca-Cola (click ticker for report: ) reported solid third-quarter results Tuesday morning. The soda giant saw revenues increase 1% (6% currency neutral) year-over-year to $12.3 billion, roughly in-line with consensus expectations. Comparable earnings fell 2% year-over-year to $0.51 per share, also in-line with consensus estimates. Not surprisingly, North America remained relatively strong, with volumes growing 2% year-over-year during the quarter and revenues up 5% year-over-year. With obesity backlash en vogue, the segment leaders included Coke Zero (up 9%), Seagram (up 11%), juices (up 6%), and Powerade, which grew 9%. We expect these trends to continue, and we wouldn’t be too shocked to see Coke Zero eventually become one of Coca-Cola’s top North American products, in the realm … Read more