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Will Monster Beverage Stock Have Enough Energy for 2017?


Jan. 25 2017, Published 12:30 p.m. ET

MNST stock price movement

As of January 23, 2017, Monster Beverage (MNST) stock has fallen 1.8% to $43.52 since the start of 2017. The stock fell 10.7% in 2016, underperforming the S&P 500 Index, which rose 9.5%.

Stocks for nonalcoholic beverage companies Coca-Cola (KO), PepsiCo (PEP), and Dr Pepper Snapple Group (DPS) have returned -0.10%, -0.60%, and 0.60%, respectively, year-to-date.

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Performance so far

Monster Beverage sales rose 10.5% to $2.3 billion in the first three months of 2016. The company exceeded analysts’ sales expectations in the first two quarters of 2016 but missed their estimate in the third quarter of 2016.

Monster Beverage’s performance in recent quarters has been negatively impacted by foreign currency fluctuations and a disruption caused by the transition to Coca-Cola (KO) distributors. In June 2015, Monster Beverage and Coca-Cola entered into a strategic deal in which Coca-Cola purchased a 16.7% stake in Monster Beverage and transferred its energy drink brands. In return, Monster Beverage transferred its non-energy drink brands to Coca-Cola and agreed to make Coca-Cola its preferred distribution partner.

At MNST’s investor conference on January 12, 2017, vice chairman and president Hilton Schlosberg said that in 2016, the company transitioned to Coca-Cola distributors in 42 markets. He said the company plans to transition to Coca-Cola distributors in 40 additional markets in 2017.

Series overview

In this series, we’ll be looking at Monster Beverage’s efforts to improve its sales. We’ll also look at its earnings expectations and valuation. We’ll finish the series by looking at analyst recommendations for MNST stock.

Let’s start by looking at Monster Beverage’s sales strategy.


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