By Chelsey Dulaney
Monster Beverage Corp. traded at all-time highs Friday after the
energy-drink maker logged its fourth-straight quarter of
better-than-expected earnings.
The Corona, Calif.-based company, whose caffeine-packed energy
drinks hit the market more than a decade ago, said it saw sales
accelerate in the U.S. toward the end of 2014 and the beginning of
this year.
With much of the company's sales coming from convenience stores,
Monster is getting a boost from the tumble in gasoline prices, as
well as from recent price increases and strong sales from new
products such as its Ultra Sunrise drink.
Shares gained 13% to $141.31 in midday trading. Earlier in the
session, the stock hit a high of $143.90, more than double its
year-ago price.
Monster's strength comes amid a decadelong slump for U.S. soda
consumption that has hurt beverage giants such as Coca-Cola Co. and
PepsiCo Inc.
According to Nielsen data, Monster sales grew 10.8% in the 13
weeks ended Jan. 24, outpacing the 7.1% sales increase the overall
energy drink division posted overall. Earlier this month, both Coke
and Pepsi reported slight drops in revenue and sluggish soda
volumes in their latest quarters.
In a bid to tap into Monster's growth, Coke agreed in August to
acquire a minority stake in the company after years of speculation.
The deal, expected to close by summer, will give Coke a 17% stake
in Monster while the companies also swap some brands. A standstill
agreement limits Coke to increasing its stake to 25% over four
years.
The Coke partnership--which expands the companies' distribution
relationship--stands to lift Monster as well, especially abroad, as
Monster gains access to Coke's global network.
Coke shares rose 1.2% Friday to $42.98 in midday trading and
were the second-biggest gainer on the Dow Jones Industrial
Average.
Stifel analyst Mark Astrachan said Friday that he expects the
combination of Monster's strength and the Coke deal to drive
double-digit sales growth and significant operating margin
expansion for Monster through 2017.
For the quarter ended Dec. 31, Monster's profit surged 65% to
$125.3 million, surpassing the average analyst estimate of $101.5
million, according to Thomson Reuters. Sales, meanwhile, grew 12%
to $605.6 million, topping the $584.5 million expected on average
by analysts surveyed by Thomson Reuters.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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