Monster Beverage Shares Fall After Profit Trails Estimates

Monster Beverage Corp. (MNST) fell in late trading after second-quarter profit and sales trailed analysts’ estimates as costs increased.

The shares tumbled 10 percent to $61 at 5:32 p.m. in New York. The Corona, California-based company’s stock had gained 47 percent this year through the close of regular trading today.

Second-quarter profit was 59 cents a share, the company said in a statement today. The average of nine analysts’ estimates compiled by Bloomberg was 61 cents a share. Sales rose 28 percent to $592.6 million, trailing analysts’ average projection of $595.9 million.

“When you trade at a high multiple, you can’t miss,” Damian Witkowski, an analyst with Gabelli & Co., said in a telephone interview.

Monster trades at about 38 times earnings, according to data compiled by Bloomberg. Coca-Cola Co., the world’s largest soft-drinks maker, trades at 20 times earnings.

Monster and Atlanta-based Coca-Cola are facing higher costs for ingredients such as sweeteners and plastic for bottles. The cost of sales at Monster rose 31 percent to $285.6 million in the quarter. While costs rose, profit was up 30 percent in the quarter to $109.8 million.

“Costs were up, but earnings were still strong,” Witkowski said.

To contact the reporters on this story: David Welch in Detroit at dwelch12@bloomberg.net; Kevin Orland in Chicago at korland@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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