Shares of Monster Beverage (MNST +0.16%) were pulling back today after the energy-drink specialist disappointed in its second-quarter earnings report.
As a result, the stock was down 10.9% as of 3:01 p.m. ET.
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Monster misses the mark
Monster reported revenue growth of just 2.5% to $1.9 billion, though currency-neutral sales were up 6.1%, or 7.4%, excluding the Alcohol Brands segment. Nonetheless, the headline number was short of analyst estimates.
Among other things, the company blamed falling convenience store traffic and broader weakness in the energy drink category.
Slowing growth on the top line weighed on the bottom line as well, though gross margin improved from 52.5% to 53.6% due to decreased freight costs, higher prices in some markets, and lower can costs.
Operating expenses rose faster than revenue, however, and the company reported a profit per share of $0.41, up from $0.39 a year ago but below the consensus at $0.45.
Noting the higher-level challenges, co-CEO Hilton Schlosberg said, "Other beverage and consumer packaged product companies have also seen a tighter consumer spending environment and weaker demand in the quarter." The company also said it plans to raise prices by 5% in November on core brands in the U.S.
NASDAQ: MNST
Key Data Points
What's next for Monster
Monster did not offer guidance in the earnings release, but the slowing growth could be a longer-term problem. The company has benefited from outstanding growth in the energy drink category for decades, but the market is eventually going to mature.
A weakening consumer also adds to the company's concerns as other consumer discretionary companies have reported slower demand. Finally, competition from Celsius Holdings, the fast-growing energy-drink company could also be impacting Monster.
With no guidance to go by and its slowest revenue growth in memory, investors should tread cautiously with the stock.
