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Can Monster Beverage Get Back Some Energy with 1Q18 Results?


Dec. 4 2020, Updated 10:53 a.m. ET

Upcoming 1Q18 results

Monster Beverage (MNST) is expected to announce its 1Q18 results after the markets close on May 8. The stock of this leading energy drinks maker has fallen 16.7% on a YTD (year-to-date) basis as of May 2. It fell 14.4% on March 1 when the company missed analysts’ expectations for 4Q17. Investors were also disappointed with the slowdown in its 4Q17 sales growth rate.

Let’s look at some of its nonalcoholic beverage peers. Coca-Cola (KO) and PepsiCo (PEP) have fallen 8.3% and 18.9%, respectively, since the start of the year. As of May 2, Monster Beverage lagged the S&P 500 Index, which has fallen 1.4% YTD.

MNST stock rose 42.7% in 2017, significantly outperforming the S&P 500 Index, which rose 19.4%. The company has been generating a better sales growth rate compared to its larger rivals Coca-Cola and PepsiCo, which are struggling with dull soda volumes.

However, Monster Beverage’s 4Q17 sales growth was hit by inventory reductions in certain international regions.

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Forward valuation

As of May 2, Monster Beverage was trading at a 12-month forward PE (price-to-earnings) multiple of 28.5x. Its valuation multiple has declined 15.1% since the announcement of its 4Q17 results in February. As of May 2, Coca-Cola and PepsiCo were trading at 12-month forward valuation multiples of 19.5x and 16.6x, respectively.

Analysts expect Monster Beverage to generate higher sales and earnings growth rates this year, which we’ll look at in Parts 2 and 3 of this series. Let’s start by looking at the company’s expectations for its 1Q18 sales.


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