Use access key #2 to skip to page content.

Varchild2008 (84.34)

GREED Trumps Logic at (UBS) and (GS)



February 25, 2011 – Comments (0) | RELATED TICKERS: MNST

So we have a big Earnings Miss in Q4 2010 resulting in shares at (HANS) skyrocketing to near $60.00? 

Is it because one can easily paint Q4 2010 as a Fluke Miss Job that should be ignored?

Well, not if one can also show through the Earnings Report that Expenditures have spiked in multiple areas of the Business as HANS expands their Monster Energy Drinks and Juice Drinks to more countries.

1)  General and Administrative Expenses:  up .6% of Sales     $5.6 Million Increase  Y/Y

2)  Sponsorship and Endorsement Costs:   up $11.2 Million Y/Y  also higher as a percentage of net sales.

3)  Professional Service Fees:    Up  $13.4 Million

4)  Point of Sale Materials costs:  UP  $6.2 Million

5)  Effective Full Year Tax Rate:   UP  39.3 %   versus 37.8%

And what did GS and UBS come out and say?    HANS = GLOBAL   so continued increase in Sales will offset this somehow...

Gee brilliance....    As a Dr. Pepper Snapple Group (DPS) investor I remain positively skeptical here that (HANS) is somehow deserving of a 25 times P/E Multiple....

GS has a $60 price target... That probably pushes (HANS) to 25.5 to 26 times earnings.

DO YOU WANT TO PAY   25 to 26 TIMES EARNINGS  for a Beverage Company that has to skyrocket their Costs to boost their Sales and the Growth Rate seems to have Shrunk Considerably as a result?

Listen....    If I was a Tire Company and I sold 100,000 Tires in 2009....and earned $1 million net profit... and then I sell 200,000 Tires in 2010....what would be my Profit????

Would it be $2 Million?  and therefore I have a 100%  Double Bagger Sales/Earnings/Profit Growth?

Or would telling you that I had to spend $750,000  in 2010 in order to generate enough business world wide to sell the additional 100,000 tires + my Tax Rate has gone up 2%.

Now how BULLISH are you with my TIRE company?

GOLDMAN SACHS and UBS don't seem to care about (HANS) expenditures and Tax Rates and everything cutting into EPS.

But... When a high flying company boasts Record Sales Figures for 2010 and Record Sales in Q4 2010 and yet the EPS for Full Year is only 7 cents a share greater and Q4 2010 is less than Q4 2009?

How long do you think it will take Investors to realize that it is nothing more than abject GREED to sit there expecting HANS to translate Record SALES into its Historic 5 Year Growth Rate?

It will take YEARS....before HANS can get a handle on their expenses and costs and Tax Rates and so on... YEARS....  I would not sit there thinking that HANS deserves an insane P/E Multiple because of its Historic Growth Rates.... Because there's nothing HISTORIC about the growth as long as Expenses are cutting so deeply into Revenue.

0 Comments – Post Your Own

Featured Broker Partners