(MNST - Analyst Report
) sees growth in the implied earrings growth rate and has recently become a Zacks #1 Rank
Monster Beverage makes alternative beverage category beverages.
The company's Direct Store Delivery segment offers carbonated
energy drinks, non-carbonated dairy based coffee plus energy
drinks and ready-to-drink iced teas.
This segment sells its products through a distributor network. The
company was formerly known as Hansen Natural Corporation and
changed its name to Monster Beverage Corporation in January 2012.
Monster Beverage Corporation was founded in 1985 and is based in
Monster Beverage Meets or Beats Estimates in Five of Last Seven
Monster Beverage has met or topped the Zacks Consensus
Estimate in five of the last seven quarters. The four beats have
come in on average more than $0.03 higher than the Zacks Consensus
Estimate. Those three cents translate into positive earnings
surprises of more than 9.5%. The stock has generally reacted
positively when the company beats expectations. The stock was up
3.2% on average following the four beats.
The second largest price movement in the stock came the day after
the company met estimates. The September 2011 quarter saw the
company beat the topline estimate of $461 million by posting
revenues of $475 million. EPS was in line with the Zacks
Consensus Estimate and the stock moved higher by 8.3%.
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Monster Beverage Most Recent Reported Earnings
On May 9, 2012 Monster Beverage reported revenue of $455
million, approximately $8 million higher than the Zacks Consensus
and up from $356
million reported in year ago quarter, an increase
of 28%. In
addition, earnings per
share came in at $0.41, $0.03 higher than
the Zacks Consensus Estimate of $0.38. The beat of 7.9%
helped lift the stock higher by 8.6% in the session following the
Monster Beverage Sees Estimates Moving Higher
Monster Beverage has seen earnings estimates move higher
following the recent positive earnings surprise. The Zacks
Consensus Estimate for 2012 was as low as $1.85 in December 2011
and has since moved to $2.03. That represents an
increase of more than 9.7%.
Estimates for 2013 have also seen an increase following the most
recent quarterly release. The Zacks Consensus Estimate for 2013
stood at $2.21 and
has since moved to $2.41. The increase of 12% for 2013 is part of
the key driver for the stock. Better than the 12% increase in
2013 earnings expectations is the 22% implied growth rate for
earnings from 2012 to 2013. That is the type of growth that
aggressive growth investors look for.
The valuation for Monster Beverage can be summed up as double the
industry average. The trailing twelve months PE multiple of 43x is
more than double the 19x industry average. The forward PE sports
a similar premium at a 35x multiple compared to a 17x industry
average. Price to book is 11.5x compared to 5.2x industry average
and the price to sales multiple is 6.9x, more than double the 3x
industry average. The "double" the industry average is justified,
in that MNST has grown revenue by 28% on year over year basis
while the industry average is a mere 5.4%. EPE growth of 39% is
also well above the industry average of negative 4.6%. Multiples
of a growth stock are generally on the high side for good reason,
and MNST supports its high multiples with growth.
A quick look at the price and consensus chart shows a stock that
has done nothing by move higher. Earnings estimates have also
pretty much continuously moved higher, but the stock is well above
the earnings lines implying a rich valuation. The multiples for
this stock are on the high side for good reason, and MNST supports
its high multiples with revenue and earnings growth. Monster
Beverage has moved to a
Zacks #1 Rank (Strong Buy) as of May 11, 2012.
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
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