Today’s share price reaction to the earnings news is enough that you might wonder if those old buyout rumors might be surfacing again. The question is whether or not The Coca-Cola Company (NYSE: KO) or another outfit wants to pay more than $12 billion for an acquisition.
Earnings came in up 38% to $0.41 EPS and revenues came to $454.6 million. We had estimates of $0.38 EPS and $447.1 million in revenues. There was also an impressive operating margin gain which grew to 27.8% from 24.8% as growth in Asia is paying off. Shares closed at $65.31 on Wednesday and the pre-market action has shares up 12% at $73.20. The market cap at yesterday’s close was $11.4 billion and the 52-week trading range is $32.35 to $83.96.
From an outsider’s view, Monster looks like a beverage company where the time to acquire it may have come and gone. Monster trades at well over 30-times expected 2012 earnings against about 18-times earnings for Coca-Cola and about 16-times expected earnings for Pepsico, Inc. (NYSE: PEP). Coca-Cola has finally come back in favor for defensive investors, and Pepsico is in a state of flux where many feel it has lost its way. It seems like for now these two beverage giants would not be wanting to spend well over $12 billion to buy an energy drink outfit, but in the end everything may just boil down to price.
JON C. OGG
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