Monster Beverage Corporation (MNST)

Fundamental Analysis

Monster Beverage Corporation, Monster for short, is a beverage manufacturer. The company was founded in 1927 in California, USA and sold juices. The company started out under the name Hansen’s. One of the products it eventually launched was Monster energy drink. It gradually gained dominance in the company’s beverage portfolio in such a way that the company decided to rename itself Monster Beverage Company and also started using its logo for the logo of the entire group.

Today, Monster Beverage Company has a share of about 39% in the global energy drink market. This is the second largest share after Red Bull.

The company sells dozens of drinks under different names. Some it created itself, others it bought from competitors or bought the entire company outright. It focuses on energy drinks, but also sells water, soft drinks and alcoholic beverages.

The company’s turnover is growing gradually. It has also done well in Covid. In 2023, it achieved sales of $7.1 billion, net profit was $1.6 billion.

Energy drinks turnover for Q4 2023 was USD 1.6 billion, up 15% from 2022.

Operating expenses were $1.84 billion.

The company repurchased approximately 800,000 shares for $43.2 million. Monster may repurchase shares for up to $642 million in subsequent years. This repurchase was authorized by the company earlier.

Monster does not pay a dividend and is a constituent of the S&P 500 index.

Results

In 3Q2024, the company was hit by unexpected additional warehousing costs, primarily in the Alcoholic Beverages segment.

In addition, the company completed the purchase of Vital Pharmaceuticals. Despite the additional acquisition costs, this purchase generated $22.7 million in sales and earnings per share of $0.02.

Total sales in 3Q2024 increased by 1.3% to USD 1.88 billion.

Technical analysis

The moving averages have narrowly turned into an uptrend.

The share price tends to bounce a lot off supports and resistances.

Average volume is well above 1,000,000 shares traded per day.

The RSI is in the neutral zone. Thus, slow price changes give the RSI time before it very rarely goes to extremes.

Price is currently at support/resistance around the $50 per share price. This is a long term significant price level.

Conclusion

Monster has a globally popular drink that generates decent profits. As a large multinational company, Monster’s sales are growing very slowly but steadily. Net profit is also growing slowly but growing.

The share buyback is keeping the price at current levels but not helping it grow. The company has the funds to buy more.

The moving averages have crossed closely into growth. The next resistance is at $60 per share, 20% higher than the current price. Support at $50 helps hold the price.

However, if the support doesn’t hold and the price starts to fall, the next support is at the $43 price. And the moving averages would probably cross into the decline, which could help the decline even further.