NVIDIA Corporation (NVDA), Onyx Pharmaceuticals, Inc. (ONXX): Three Things That Caught My Attention Last Week

Monster Beverage
Whether or not you want to believe it, the time has probably come to sound the alarm of concern if you’re a shareholder in energy-drink maker Monster Beverage Corp (NASDAQ:MNST). Things are an absolute mess despite the company reporting a 6.5% increase in quarterly revenue to $484.2 million, with multiple other metrics headed in the wrong direction.

To begin with, every imaginable expense rose from the year-ago period. Distribution costs as a percentage of sales jumped to 4.6% from 4.3%. General and administrative expenses saw an even bigger jump, from 8.7% of sales to 11.8% of sales. Selling expenses also rose to 13.5% of sales from 12.3% last year.

If rising costs aren’t worrisome enough, unfavorable currency translation took $4.7 million off profits, distributor-terminated contracts lopped off another $8.3 million, and the company spent $3 million on what are bound to be ongoing legal fees associated with defending its Monster Beverage Corp (NASDAQ:MNST) drinks against allegations that they aren’t safe. You don’t have to be a math major to see that this is a Monster-size problem!

The allure of energy drink companies is their rapid growth prospects relative to existing sparkling and still beverages. With Monster’s sales growth sinking rapidly and a cloud hanging over its operations with regard to the safety of its drinks, I feel you’d be wise to keep a very safe distance from this company.

The article 3 Earnings Reports That Caught My Attention Last Week originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Microsoft and Monster Beverage and recommends Celgene, Monster Beverage, and NVIDIA Corporation (NASDAQ:NVDA).

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