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Assessing Monster Beverage’s Valuation after Its Strong Q1

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Valuation after Q1 results

Monster Beverage’s (MNST) 12-month forward PE multiple rose 6.3% to 29.5x on May 3 after the company released its first-quarter results. Its sales grew 11.2% to $956 million in the first quarter, beating analysts’ forecast of 7.4%. The company’s EPS grew 28.2% to $0.50 on an adjusted basis and 26.3% to $0.48 on a reported basis. Analysts expected EPS of $0.42.

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Analysts’ growth expectations

In the first quarter, Monster Energy Brand drinks’ demand was maintained and Monster Beverage improved its strategic brand portfolio, which includes energy drinks acquired from strategic partner Coca-Cola (KO) and the company’s affordable brands.

Analysts now expect Monster Beverage’s sales to rise 10.4% to $4.2 billion this year, and its adjusted EPS to grow 14.4% to $2.06.

Monster Beverage’s innovation is also expected to boost sales. The company has received positive results for its Reign Total Body Fuel performance energy drink, which was launched in six flavors in March. New launches this year in Canada include line extensions of Monster Hydro (Purple Fashion and Zero Sugar) and Monster White Dragon Tea. Other introductions made so far this year comprise Monster Absolutely Zero in Chile, Monster Ultra in Argentina, Pacific Punch in the Caribbean, and Espresso Monster and Espresso Monster Vanilla in Germany and Spain.

Monster Beverage has launched Monster Mango Loco in Norway, the Netherlands, Poland, the Baltics, and Italy. The company aims to roll out Monster Mango Loco in 12 more EMEA (Europe, the Middle East, and Africa) markets in the second quarter.

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