Company Reports

Monster Beverage grew second-quarter sales by 18% (currency-neutral). International was very strong, growing 29%. Adjusted operating margin contracted roughly 180 basis points to 29.5% driven by higher distribution, aluminum, and selling costs, as well as mix effect from higher international sales.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through constant innovations that resonate with consumers as well as effective marketing that keeps its brand top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, has further reinforced Monster’s competitive standing, affording the firm impressive distribution breadth and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Monster Beverage's first-quarter sales increased by 22% (currency-neutral). International was very strong, up 33%. An unfavorable mix, higher aluminum can and freight costs offset higher prices and overhead cost leverage to narrow its adjusted operating margin by 18 basis points to 31.2%.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through constant innovations that resonate with consumers as well as effective marketing that keeps its brand top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, has further reinforced Monster’s competitive standing, affording the firm impressive distribution breadth and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through constant innovations that resonate with consumers as well as effective marketing that keeps its brands top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, has further reinforced Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Monster Beverage increased fourth-quarter sales by 18% on a 27% rise in the international segment, but this was offset by a slightly unfavorable mix, which narrowed adjusted operating margin by 40 basis points to 29%.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through constant innovations that resonate with consumers as well as effective marketing that keeps its brands top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, further reinforced Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Monster Beverage posted 17% sales growth in the third quarter, led by a 23% rise in the international segment. Operating profits rose 41% as margins widened 520 basis points to 30.7%. Shares rose 6% in the morning trading on Nov. 7.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through innovations that resonate with consumers and effective marketing that keeps its brands top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, further reinforced Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Monster Beverage posted 11% sales growth in the second quarter, led by a 16% rise in the international segment. Operating profits rose 19.8% as margins widened 220 basis points to 29.9%.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through innovations that resonate with consumers and effective marketing that keeps its brands top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, further reinforced Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Monster Beverage’s sales fell 2% in the first quarter but would have grown 2% excluding currency impact and the alcohol brands. Operating profit rose 5% as margin widened 220 basis points to 30.7%.

We are maintaining our fair value estimates for the beverage firms we cover following the US tariff announcements April 2. While tariffs for an extended period will pressure sales and margins, we think it’s possible that they could be rescinded as they tend to be used as a negotiating tactic. We see investment opportunities in Brown-Forman and Constellation Brands, which trade at respective 36% and 34% discounts to our $52 and $274 fair value estimates.

Although not the pioneer in energy drinks, Monster Beverage has built its perch in this attractive category through innovations that resonate with consumers and effective marketing that keeps its core brand top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, further reinforced Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Although not the pioneer in energy drinks, Monster Beverage has earned its perch in this attractive category through innovations that resonate with consumers and effective marketing that keeps its core brand top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, further reinforced Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Shares of narrow-moat Monster Beverage fell 3% in after-hours trading on Nov 7, as soft third-quarter results were partially offset by management’s favorable international growth outlook. Despite a spate of recent acquisitions in the energy drink category that brought in larger beverage rivals, including narrow-moat Keurig Dr Pepper buying Ghost and no-moat Molson Coors taking a majority stake in ZOA, we think Monster’s competitive standing in energy drinks remains largely intact. Our confidence is underpinned by Monster’s steadfast investment in innovation and brand marketing and its long-term distribution partnership with wide-moat Coke. In the coming years, we expect Monster to drive US growth with more flavored offerings and better-for-you options, while accelerating international expansion by offering premium and affordable products under different brands. We don’t plan any material changes to our 2024 estimates or our 10-year projections, leaving our $52 fair value estimate in place. Shares look fairly valued.

Although not the pioneer in energy drinks, Monster has earned its perch in this attractive category through innovations that resonate with consumers and effective marketing that keeps its core brand top of mind. The long-term distribution partnership with wide-moat Coca-Cola, effective since 2015, further advances Monster’s competitive standing, affording the firm impressive distribution breath and product accessibility that is hard to match by rivals. As such, we award a narrow economic moat rating for Monster.

Narrow-moat Monster Beverage hit a soft patch in the second quarter, increasing sales and earnings per share by 2.5% and 5%, respectively. This marks a deceleration from its double-digit-rate growth trajectory in the past five quarters, but we attribute the slowdown largely to consumer belt-tightening in the US (61% of total sales), in particular falling foot traffic at convenience stores, a key channel. As we expect the US macro backdrop to remain challenging for Monster and outweigh growth momentum internationally, we plan to trim our 2024 sales and EPS by a low-single-digit percentage. That said, we believe Monster’s steadfast investment in innovation and brand marketing, with its long-term distribution partnership with wide-moat Coke, should drive high-single-digit annual sales growth and low 30s operating margins over the next decade. We plan no material change to our $52 fair value estimate. Shares look undervalued after the low-double-digit slide in earnings.