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Category: Stock Market and Monster Beverage Corp
Date: 8 November 2019 Stock Price: $44.64 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Monster Beverage Corporation, the owner of popular energy drinks such as Monster Energy and Muscle Monster
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About Monster Beverage Corporation
Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The Company’s subsidiaries develop and market energy drinks, including Monster Energy® energy drinks, Monster Energy Ultra® energy drinks, Monster MAXX® maximum strength energy drinks, Java Monster® non-carbonated coffee + energy drinks, Espresso Monster® non-carbonated espresso + energy drinks, Caffé Monster® non-carbonated energy coffee drinks, Monster Rehab® non-carbonated energy drinks, Muscle Monster® energy shakes, Monster Hydro® energy drinks, Reign Total Body Fuel™ high performance energy drinks, NOS® energy drinks, Full Throttle® energy drinks, Burn® energy drinks, Samurai® energy drinks, Relentless® energy drinks, Mother® energy drinks, Power Play® energy drinks, BU® energy drinks, Nalu® energy drinks, BPM® energy drinks, Gladiator® energy drinks, Ultra Energy® energy drinks and Predator® energy drinks.
Overview of Monster Beverage Corp's 3rd quarter 2019 earnings report
The data below refers to the most recent quarter unless specified otherwise
- Net sales: $1.133 billion (up from $1.016 billion from the same quarter of the previous year)
- Net sales increased by 11.5% over the last 12 months
- Cost of sales: $460.575 million (up from $408.501 million for the same quarter of the previous year)
- Cost of sales increased by 12.7% over the last 12 months
- Net income: $298.923 million (up from $267.733 million for the same quarter of the previous year)
- Diluted earnings per share: $0.55 (up from $0.48 for the same quarter of the previous year)
- PE ratio of Monster Beverage Corporation: 27
- PE ratio of Monster Beverage Corporation: 27
- Diluted weighted-average shares outstanding: 548.422 million (down from 559.955 million for the same quarter of the previous year)
- Cash and cash equivalents: $717.617 million
- Cash and cash equivalents per share: $1.31
- Cash and cash equivalents makes up 2.3% of Monster Beverage Corp's market capital
- Cash and cash equivalents makes up 13,9% of Monster Beverage Corp's total assets
- Goodwill in Monster Beverage Corp: $1.331 billion
- Goodwill per share: $2.42
- Goodwill makes up 25.9% of Monster Beverage Corp's total assets
- Stockholders equity in Monster Beverage Corporation: $4.107 billion
- Stockholders equity per share in Monster Beverage Corp: $7.48
- Monster Beverage Corporation is trading at 7.6 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
Monster's management commentary on their 3rd quarter 2019 earnings and guidance
CORONA, Calif., Nov. 07, 2019 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (NASDAQ: MNST) today reported financial results for the three- and nine-months ended September 30, 2019.
Rodney C. Sacks, Chairman and Chief Executive Officer, said: “We are pleased to report record gross and net sales in the 2019 third quarter, driven by our Reign Total Body Fuel™ high performance energy drinks, which we launched in the first quarter, as well as growth in our Monster Energy® brand energy drinks internationally.
“In the third quarter we launched or transitioned our Monster Energy® brand energy drinks to the Coca-Cola bottlers in the Dominican Republic, El Salvador and Honduras. Further country launches and transitions are planned for the fourth quarter. “We launched a number of new Monster Energy® brand energy drinks and three new Reign Total Body Fuel™ high performance energy drinks during the third quarter and in October, in the United States. Internationally, we added various Monster Energy® brand energy drinks to our portfolio in certain countries in the third quarter. We launched our Reign Total Body Fuel™ high performance energy drinks in Sweden in the third quarter and are planning further introductions in other international markets. “We also launched Predator®, our affordable energy brand in additional international markets during the third quarter, with plans for further launches of Predator® later this year and into 2020,” Sacks added.
Rodney C. Sacks, Chairman and Chief Executive Officer, said: “We are pleased to report record gross and net sales in the 2019 third quarter, driven by our Reign Total Body Fuel™ high performance energy drinks, which we launched in the first quarter, as well as growth in our Monster Energy® brand energy drinks internationally.
“In the third quarter we launched or transitioned our Monster Energy® brand energy drinks to the Coca-Cola bottlers in the Dominican Republic, El Salvador and Honduras. Further country launches and transitions are planned for the fourth quarter. “We launched a number of new Monster Energy® brand energy drinks and three new Reign Total Body Fuel™ high performance energy drinks during the third quarter and in October, in the United States. Internationally, we added various Monster Energy® brand energy drinks to our portfolio in certain countries in the third quarter. We launched our Reign Total Body Fuel™ high performance energy drinks in Sweden in the third quarter and are planning further introductions in other international markets. “We also launched Predator®, our affordable energy brand in additional international markets during the third quarter, with plans for further launches of Predator® later this year and into 2020,” Sacks added.
Share Repurchase Program
During the 2019 third quarter, the Company purchased approximately 4.3 million shares of its common stock at an average purchase price of $58.60 per share, for a total amount of $254.3 million (excluding broker commissions). As of November 6, 2019, approximately $36.6 million remained available for repurchase under the February 2019 repurchase program.
On November 6, 2019, the Company’s Board of Directors authorized a new repurchase program for the repurchase of up to an additional $500.0 million of the Company’s outstanding common stock. The Company expects to make the share repurchases from time to time in the open market or through privately-negotiated transactions, or otherwise, subject to applicable laws, regulations and approvals. The timing of the share repurchases will depend on a variety of factors, including market conditions, and the share repurchases may be suspended or discontinued at any time.
During the 2019 third quarter, the Company purchased approximately 4.3 million shares of its common stock at an average purchase price of $58.60 per share, for a total amount of $254.3 million (excluding broker commissions). As of November 6, 2019, approximately $36.6 million remained available for repurchase under the February 2019 repurchase program.
On November 6, 2019, the Company’s Board of Directors authorized a new repurchase program for the repurchase of up to an additional $500.0 million of the Company’s outstanding common stock. The Company expects to make the share repurchases from time to time in the open market or through privately-negotiated transactions, or otherwise, subject to applicable laws, regulations and approvals. The timing of the share repurchases will depend on a variety of factors, including market conditions, and the share repurchases may be suspended or discontinued at any time.
Monster Beverage Corporation (NASDAQ: MNST) stock price history
The image below, obtained from Google, shows the stock price history of Monster Beverage Corporation (NASDAQ: MNST) over the last 5 years. And its been a pretty decent time for Monster Beverage Corporation stockholders. 5 years ago the stock of Monster was trading at around $36 a stock and its currently trading at $56.64. That's a pretty healthy return of 57.3% provided to Monster Beverage Corporation stockholders over the last 5 years.
Monster Beverage Corporation stock is trading at close to the midpoint between its 52 week high and its 52 week low, which to us is an indication that the short term sentiment and momentum of Monster stock is neutral, and when this is the case a company's stock will tend to trade mostly sideways in a narrow range. And it is evident from the image below that this has been the case for Monster for a while
Monster Beverage Corporation stock is trading at close to the midpoint between its 52 week high and its 52 week low, which to us is an indication that the short term sentiment and momentum of Monster stock is neutral, and when this is the case a company's stock will tend to trade mostly sideways in a narrow range. And it is evident from the image below that this has been the case for Monster for a while
Recent coverage of Monster Beverage Corporation
The extract below shows recent coverage of Monster Beverage Corp as obtained from SeekingAlpha.com
Monster Beverage (NASDAQ:MNST) reports case sales were up to 9.7% in Q3 and average net sales per case improved to $9.25 from $9.09. Gross margin fell back 40 bps from a year ago during the quarter. The negative impact of MNST's geographical and product sales mix during the quarter was only partially offset by price increases as well as reduced input costs. Operating income came in at $395.4M vs. $339.6M a year ago. Operating margin was 34.9% of sales vs. 34.5% consensus. Monster's board approved a new $500M share buyback plan. Shares of Monster are up 0.65% AH to $57.01.
Read the full article here
Monster Beverage (NASDAQ:MNST) reports case sales were up to 9.7% in Q3 and average net sales per case improved to $9.25 from $9.09. Gross margin fell back 40 bps from a year ago during the quarter. The negative impact of MNST's geographical and product sales mix during the quarter was only partially offset by price increases as well as reduced input costs. Operating income came in at $395.4M vs. $339.6M a year ago. Operating margin was 34.9% of sales vs. 34.5% consensus. Monster's board approved a new $500M share buyback plan. Shares of Monster are up 0.65% AH to $57.01.
Read the full article here
Monster Beverage Corporation (NASDAQ: MNST) latest stock valuation
So based on Monster Beverage Corporation's latest earnings report what do we value Monster stock at? Based on their earnings reported our valuation model provides a target (full value) price for Monster Beverage Corporation at $46.20 per stock
We therefore believe that the stock of Monster Beverage Corporation stock is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $46.20. A good entry price into Monster Beverage Corporation would therefore be at $41.60 or below.
We expect the stock of Monster Beverage Corporation to pull back from current levels to levels closer to our target price in coming weeks and months as we do believe the group's stock is overvalued.
We therefore believe that the stock of Monster Beverage Corporation stock is overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $46.20. A good entry price into Monster Beverage Corporation would therefore be at $41.60 or below.
We expect the stock of Monster Beverage Corporation to pull back from current levels to levels closer to our target price in coming weeks and months as we do believe the group's stock is overvalued.
Next earnings release of Monster Beverage Corporation
It is expected that Monster Beverage Corporation will release their 4th quarter and full fiscal 2019 results in early February 2020