With accelerating digitization and advanced ordering systems, beverage companies have witnessed solid revenue growth over the past months. However, people are again taking a pass on away-from-home beverage consumption due to rising health concerns with the rising spread of the COVID-19 omicron variant. The negative effects of energy drinks and other sugary drinks is also a growing cause for concern among consumers.
Though many beverage companies are trying to reshape their products to address concerns related to health issues by focusing on dairy-free and plant-based alternatives, sugar reduction, and sustainable packages, not all companies are fundamentally strong enough to adopt such changes quickly.
Keurig Dr Pepper Inc. (KDP)
Plano, Tex.-based KDP is a beverage company that offers more than 125 hot and cold beverages. The company operates through Coffee Systems; Packaged Beverages; Beverage Concentrates; and Latin America Beverages segments. KDP’s brand portfolio includes CSD brands, which include Dr. Pepper, Canada Dry, Schweppes, Crush, Sunkist, A&W, 7UP, Sun Drop, Squirt, Big Red, Hawaiian Punch and RC Cola, and NCB brands.
KDP’s net sales increased 7.6% year-over-year to $3.25 billion in the third quarter, ended Sept. 30, 2021. However, the company’s interest expense was $116 million. Its cash and cash equivalents decreased 16.7% to $200 million for the nine months ended Sept.30, 2021.
KDP’s POWR Ratings are consistent with this bleak outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The stock has a C grade for Value and Growth. We have also graded KDP for Quality, Sentiment, Momentum, and Stability. Click here to access all KDP’s ratings. KDP is ranked #15 of 35 stocks in the B-rated Beverages industry.
Monster Beverage Corporation (MNST)
Incorporated in 1990, MNST in Corona, Calif., develops, markets, and distributes energy drink beverages and concentrates for energy drink beverages in the United States and internationally. The company operates through three segments – Monster Energy Drinks; Strategic Brands; and Other. The company offers carbonated and non-carbonated energy drinks, non-carbonated dairy-based coffee and energy drinks, non-carbonated energy teas and shakes, and ready-to-drink packaged energy drinks.
During the third quarter, ended Sept.30, 2021, MNST’s net sales increased 13.2% year-over-year to $1.41 billion. However, the company’s operating expenses grew 24% from the year-ago value to $344.69 million. Its operating income decreased 3.1% from the prior-year quarter to $444.46 million. Also, the company’s net income declined 3% year-over-year to $337.21 million.
Analysts expect MNST’s EPS to decrease 1.6% in the current quarter of its fiscal 2021.
MNST’s poor prospects are also apparent in its POWR Ratings. The stock has a D grade for Growth and Value. In addition to the POWR Rating grades I have just highlighted, one can see MNST’s ratings for Stability, Quality, Sentiment, and Momentum here. MNST is ranked #19 in the same industry.
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KDP shares were unchanged in after-hours trading Thursday. Year-to-date, KDP has gained 1.55%, versus a -1.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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