Really, the way Hansen Natural Corp. (NASDAQ: HANS) shares are dropping -- down about 14% as I write this and setting a new 52-week low earlier in the session -- you'd think the company reported disastrous results. Not so!

True, Hansen Natural reported Wednesday a lower-than-expected first-quarter profit due to lower profit margins, but the results weren't that bad. For the quarter, the company's net sales rose to $212.2 million and it earned $28.8 million, or 29 cents a share. Analysts, however, expected 35 cents on revenue of $221, according to Thomson Reuters. The thing is, that compared to last year, profit climbed 43% and revenue jumped 28%. It seems that the Monster Energy brand drinks had a lot do with Hansen's revenue growth, especially the new Java Monster dairy-based coffee drink.

The problem? Already in the fourth quarter investors were concerned about decreasing margins, and this quarter as well Hansen said its profit was hurt by higher costs, including a 34% boost in costs of sales and a 15% rise in operating expenses. Talk about margin squeeze.

And of course, it didn't help that Goldman Sachs downgraded the stock to Neutral from Buy on the results, and cut profit estimates for 2008, 2009 and 2010. Even the Monster sales growth didn't satisfy the broker and the analyst expects the weak profit margins to continue throughout the year.

So now what? It seems that a lot of the bad news has already been priced in, but the question is whether Hansen can work a good enough strategy to encounter the current climate of rising costs while still managing good top line growth. No doubt, the company has the advantage of being able to capitalize easier than Coca-Cola (NYSE: KO), PepsiCo (NYSE: PEP) and Dr. Pepper Snapple (NYSE: DPS) on the shift in consumers' drinking habits to more healthy products. But rivals are catching up, and fast. With the stock setting a new 52-week low today, I'd jump on it if I thought Hansen could pull it off, but I do have my concerns about that ability. By the way, Jones Soda Co. (NASDAQ: JSDA), which actually swung to a loss and saw its shares plunge too, has recovered somewhat the past few days.