Read This to Understand Monster Beverage Stock

Today we're going to take a closer look at large-cap Consumer Staples company Monster Beverage, whose shares are currently trading at $56.09. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

Monster Beverage Has Elevated P/B and P/E Ratios:

Monster Beverage Corporation, through its subsidiaries, engages in development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, Monster Beverage has a trailing 12 month P/E ratio of 41.9 and a P/B ratio of 7.49.

Monster Beverage's PEG ratio is 1.55, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

An Exceptionally Strong Balance Sheet:

2018-03-01 2019-02-28 2020-02-28 2021-03-01 2022-02-28 2023-03-01
Revenue (MM) $3,369 $3,807 $4,201 $4,599 $5,541 $6,311
Gross Margins 63.0% 60.0% 60.0% 59.0% 56.0% 50.0%
Operating Margins 36% 34% 33% 36% 32% 25%
Net Margins 24.0% 26.0% 26.0% 31.0% 25.0% 19.0%
Net Income (MM) $821 $993 $1,108 $1,410 $1,377 $1,192
Earnings Per Share $1.42 $1.76 $2.03 $2.64 $2.57 $2.23
EPS Growth n/a 23.94% 15.34% 30.05% -2.65% -13.23%
Diluted Shares (MM) 577 564 547 535 536 535
Free Cash Flow (MM) $1,081 $1,244 $1,223 $1,412 $1,198 $1,075
Capital Expenditures (MM) -$93 -$82 -$109 -$48 -$43 -$187
Net Current Assets (MM) n/a n/a n/a n/a n/a n/a

Monster Beverage has weak revenue growth and a flat capital expenditure trend, flat EPS growth, and irregular cash flows. We also note that the company benefits from strong margins with a negative growth trend and an excellent current ratio. However, the firm has slimmer gross margins than its peers.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.