Monster Beverage Corp (MNST, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $57.62, Monster Beverage Corp has witnessed a daily gain of 0.33%, marked against a three-month change of 8.82%. A thorough analysis, underlined by the GF Score, suggests that Monster Beverage Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 10/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 8/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and slightly lower yet strong ranks in GF Value and momentum, GuruFocus assigned Monster Beverage Corp a GF Score of 98 out of 100, which signals the highest outperformance potential.
Understanding Monster Beverage Corp's Business
Monster Beverage Corp, with a market cap of $59.95 billion and sales of $6.92 billion, is a leader in the energy drink subsegment of the nonalcoholic beverage market, generating two thirds of its revenue in the U.S. and Canada. The well-known Monster trademark includes brands such as Monster Energy, Monster Ultra, Java Monster, and Juice Monster. The firm also owns other energy drink brands, such as Reign, NOS, Burn, and Mother, and brews and distributes beers and flavored malt beverages following the acquisition of a craft brewer in 2022. Monster controls branding and innovation but outsources beverage manufacturing and packaging to copackers and finished goods distribution to bottlers in the global Coca-Cola system (pursuant to a 20-year agreement inked in 2015). Coke is the largest shareholder of Monster with a 19.5% stake.
Financial Strength Breakdown
According to the Financial Strength rating, Monster Beverage Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Interest Coverage ratio significantly high due to no long-term debt, Monster Beverage Corp stands out as a financially sound company. The legendary investor Benjamin Graham preferred companies with an interest coverage ratio of at least 5, and Monster Beverage Corp far exceeds this benchmark.
With an Altman Z-Score of 27.78, Monster Beverage Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. Additionally, with a favorable Debt-to-Revenue ratio of 0, Monster Beverage Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank reflects Monster Beverage Corp's impressive standing among its peers in generating profit. The company's solid financial situation is further confirmed by the Piotroski F-Score, which is based on Joseph Piotroski's nine-point scale measuring a company's profitability, funding, and operating efficiency.
Moreover, Monster Beverage Corp's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence in the company's ability to maintain its profitability.
Growth Rank Breakdown
Ranked highly in Growth, Monster Beverage Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate of 15.5% outperforms 83.84% of companies in the Beverages - Non-Alcoholic industry. Additionally, Monster Beverage Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years, with a three-year growth rate of 4.8 and a five-year rate of 9.2, highlighting the company's continued capability to drive growth.
Conclusion: A Strong Investment Case for Monster Beverage Corp
Considering Monster Beverage Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking companies with similar characteristics can explore more options using the GF Score Screen. With its strong market position and strategic partnerships, Monster Beverage Corp is poised to continue its trajectory of growth and profitability, making it a compelling choice for value investors.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
