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Monster Beverage Corp MNST

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

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5-Star Price

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Economic Moat

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Capital Allocation

PREMIUM

Monster Beverage Posts Solid Sales but Lackluster Profitability Amid Cost Pressure; Shares Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Our $79 per share valuation of narrow-moat Monster should rise by a low- to mid-single-digit percentage after its third-quarter earnings announcement, mostly on account of the time value of money as strong sales were offset by supply chain and aluminum can cost pressure. We view the challenges as transitory, and so our long-term forecasts (mid- to high-single-digit percentage top line growth against mid-30s adjusted operating margins) remain in place. We suggest investors await a more attractive entry point before building a position.

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Company Profile

Business Description

Monster Beverage is a leader in the energy drink subsegment of the beverage industry. The Monster trademark anchors its portfolio, and notable offerings include Monster Energy and Monster Ultra. The firm has also started to incubate new trademarks for emerging enclaves of the energy space, like Reign in performance energy. It is primarily a brand owner, outsourcing most of its manufacturing processes to third-party copackers. It primarily uses the Coca-Cola bottling system for distribution after a strategic agreement in which Coke became Monster’s largest shareholder (roughly 19%) and that also included the exchange of certain businesses between the two firms. Most of Monster’s revenue is generated in the United States, though international geographies are increasing in the mix.

Contact
1 Monster Way
Corona, CA, 92879
T +1 951 739-6200
Sector Consumer Defensive
Industry Beverages - Non-Alcoholic
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 3,666

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