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 $58.72, Monster Beverage Corp has witnessed a daily loss of 0.64%, marked against a three-month change of 7.16%. 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: 7/10
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, but slightly lower in GF Value and Momentum, GuruFocus assigned Monster Beverage Corp the GF Score of 98 out of 100, which signals the highest outperformance potential.
Understanding Monster Beverage Corp Business
Monster Beverage Corp, with a market cap of $61.50 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 aligns with Benjamin Graham's preference for companies with an interest coverage ratio of at least 5. Furthermore, with an Altman Z-Score of 28.59, Monster Beverage Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. The favorable Debt-to-Revenue ratio of 0 solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank reflects Monster Beverage Corp's impressive standing among its peers in generating profit. The Piotroski F-Score confirms Monster Beverage Corp's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency. Additionally, Monster Beverage Corp's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
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 is 15.5%, which outperforms 79.21% of companies in the Beverages - Non-Alcoholic industry. Moreover, 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. This trend accentuates 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. The company's strategic management, innovative product offerings, and strong market presence, combined with its impressive financial metrics, make it a compelling choice for investors seeking growth and stability. As Monster Beverage Corp continues to navigate the dynamic beverage industry, its solid foundation and growth prospects position it well for future success.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
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.
