Yahoo Finance Monster Beverage's (MNST) Strategies Seem Prudent: Apt to Hold
Monster Beverage Corporation MNST seems well-poised for growth, thanks to its robust business strategies. The company has been gaining from the expansion strategy and momentum in its energy drinks category. It has also been launching various products and expanding distribution across the international markets.
Buoyed by such strengths, shares of this energy drinks and alternative beverages’ marketer have gained 9.2% compared with the industry’s 4.8% growth over the past six months. A Growth Score of B further adds strength to this Zacks Rank #3 (Hold) company.
Delving Deeper
Monster Beverage’s strength in its energy drinks category has been driving its performance for a while now. The company offers a wide range of energy drinks brands such as Monster Energy, Monster Energy Ultra, Monster Rehab, Monster Energy Nitro, Java Monster, Punch Monster, Juice Monster, Monster Hydro Energy Water, Monster Hydro Super Sport, Monster Super Fuel, Monster Dragon Tea, Reign Total Body Fuel, Reign Inferno Thermogenic Fuel, Reign Storm, True North, NOS, Full Throttle, Burn, Mother, Nalu, Ultra Energy, Play Relentless, BPM, BU, Gladiator, Samurai, Live+, Predator and Fury.
Product innovation plays a significant role in the company's success. Monster Beverage launched Monster Aussie Lemonade in Japan, Monster Ultra Paradise in Malaysia, Monster Mango Loco and Pipeline Punch in Kazakhstan and Monster Mango Loco in the Philippines. In February this year, the company introduced Predator Gold Strike in Azerbaijan and the Philippines. It had earlier rolled out its first flavored malt beverage alcohol product, The Beast Unleashed, in the United States and received positive feedback. This marked the expansion of the distribution of The Beast Unleashed into additional markets, with plans for nationwide distribution ahead.
Management expressed satisfaction with its 2023 product innovations, including Monster Energy Zero-Sugar, Ultra Strawberry Dreams and Rainstorm in the United States, along with Monster Energy Lewis Hamilton 44 Zero-Sugar in EMEA.
Additionally, the company continues to benefit from its pricing actions across various regions to negate the impacts of rising commodity costs and inflation. MNST continues to implement price hikes, with additional price hikes planned in several other markets ahead. It is monitoring opportunities for further pricing actions across the United States and internationally.
On the flip side, Monster Beverage has been witnessing an increase in the cost of sales. The cost of sales rose 8.7% year over year in first-quarter 2024. Operating expenses grew 29.3% year over year while general and administrative expenses, as a percentage of net sales, expanded 320 basis points year over year to 14.3%. These expenses might dent the company’s margins in the near term.
Nonetheless, MNST has been making strategic moves to aid growth. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $7.83 billion and $1.76, respectively. These estimates indicate corresponding growth of 9.7% and 13.6% year over year. The consensus mark for 2025 sales and EPS is $8.59 billion and $2.02, respectively, indicating year-over-year increases of 9.7% and 14.7%.
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