NASDAQ constituent Monster Beverage Corporation (MNST) reports earnings Friday morning. Let’s take a look at MNST’s recent quarterly announcements, Monster’s price chart and what, if anything, the options market is estimating in front of the earnings report.
MNST Earnings Picture
In front of Friday’s Q1 earnings release, analysts are forecasting a profit of 75 cents, an increase of over 20% from a year ago.
Range views are 67 cents to 83 cents and current estimates compare to last quarter’s profit miss of 68 cents, which fell short of Street views by 16.8%.
Street estimates for MNST’s full-year 2016 earnings are pegged at $3.85 and would represent an increase of nearly 29% if achieved.
Monster Beverage’s sales are expected to climb by 12% from the year-ago period’s $587 million to $659 million and rise by 2% from last quarter’s revenue miss of $645 million.
Looking further out, analysts expect full-year sales of $3 billion for MNST stock, an increase of 11% over 2015’s $2.7 billion.
MNST Stock Short-Term Trading Record
Over the past couple years MNST stock has been mixed regarding earnings versus Street views. Monster’s profits have beat forecasts on five occasions, or 42% of the time, while coming up short 58% of the time, or on seven reports.
On the other hand, investor reaction in MNST stock has proven generally more supportive of bullish positioning.
Shares of Monster have produced one-day reactions of -1.74%, 13.61%, 2.97%, -10.47%, 13.13% and 7.87% over the past several quarters, favoring bulls.
Actual price movement in MNST stock has produced an average increase of 2.35%, but sporting a fairly significant one standard deviation of 9.05%.
Notably, the seven-period stock performance calculation in MNST has been more bullish for investors. Over the last several quarters shares have moved higher by 4% with a tighter one standard deviation of 8.25%.
Monster Beverage’s Daily Chart
Technically, MNST stock appears to favor bears. Our eye on lower prices in shares of Monster Beverage is based on confirmed pattern resistance and its downward and recently crossed RSI indicator.
Looking at the weekly price chart, Monster Beverage has carved out a lower high, stymied by resistance from the 50% Fibonacci retracement level, MNST’s 200-day simple moving average and a smoothed, upward-sloping channel line, which makes an allowance for the August flash crash.
As with any price chart, there’s always the other side to consider and shares of Monster are no different.
Currently, MNST bulls may find support from an existing double bottom. The formation developed off the August flash crash low, 38% retracement level and the more recent February low forged during the market correction.
MNST Stock Options Pricing
Monster Beverage ended Wednesday trading off by about 0.28% at $123.43. In front of Friday’s report, options traders are pricing in a 68% chance MNST will remain within a range of $102 to $133 through expiration in two days.
The math behind the MNST stock range calculation is based on the weeklys at-the-money April 29 $123 straddle market and implieds of 118%.
The pricing of the Monster straddle is the purest play on the earnings event and tells us what traders collectively expect from MNST shares in the immediate aftermath of its quarterly announcement.
The expected dollar move up or down works out to 8.7% by Friday’s close. Based on recent price reactions, a move of this magnitude would be volatile, but statistically within the normal range of expected outcomes.
Investment accounts under Christopher Tyler’s management currently own positions in MNST derivatives. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.
