馃イ MONSTER BEVERAGE: ANALYSIS 馃イ
Copyright: Joel Padilla 2023
Monster Beverage Corporation, through its subsidiaries, engages in development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments: Finished Product, Concentrate, and Other. It offers carbonated non-carbonated energy drinks, ready-to-drink iced teas and juice drinks, lemonades, juice cocktails, single-serve juices and fruit beverages, ready-to-drink dairy and coffee drinks, energy drinks, sports drinks and single-serve still waters, and sodas that are considered natural, sparkling juices, and flavored sparkling beverages.
Based on a sample of the last year [2Q/23 TTM], its average margins have been:
- Gross margin: ± 51%
- Operating margin: ± 26%
- EBITDA margin: ± 27%
- Net margin: ± 20%
The pros:
- Strong margins comparing to any other industry
- Zero net debt
- High ROIC comparing to any other
The cons:
- Lack of a strong competitive advantage because their products could easily be replicated or slowed down by some pro-health policy
- Increase of OPEX vs CAPEX (CAPEX growth > CAPEX maintenance)
- High current valuation
Based on the last report, their normalized EPS was ± $1.37 USD and its last average ROIC [TTM] was ± 22.1%. If an average PER 35 is set as a benchmark, the potential forward spread target could be:
- Optimistic: ± $56.5 USD
- Neutral: ± $47.9 USD
- Negative: ± $39.4 USD
At least, an EPS of $0.3164 USD is required for the next quarter, to keep the metrics.
In other hand, if an average EV/EBITDA 25 is set, an EBITDA increases of 8%, a Net Debt increases of 0% and Shares Outstanding increases of -0.15%, the potencial forward fair price target could be ± $48.5 USD.
Finally, according to its current P/S ration, a possible spread might be at:
- P/S 5: ± $32 USD
- P/S 10: ± $64 USD
The best analysis is yours!
J. Joel Padilla
https://www.linkedin.com/in/joelpadilla/recent-activity/
https://jjplindex.blogspot.com/
https://jjoelpadilla.wixsite.com/jjpl-index
Based on a sample of the last year [2Q/23 TTM], its average margins have been:
- Gross margin: ± 51%
- Operating margin: ± 26%
- EBITDA margin: ± 27%
- Net margin: ± 20%
The pros:
- Strong margins comparing to any other industry
- Zero net debt
- High ROIC comparing to any other
The cons:
- Lack of a strong competitive advantage because their products could easily be replicated or slowed down by some pro-health policy
- Increase of OPEX vs CAPEX (CAPEX growth > CAPEX maintenance)
- High current valuation
Based on the last report, their normalized EPS was ± $1.37 USD and its last average ROIC [TTM] was ± 22.1%. If an average PER 35 is set as a benchmark, the potential forward spread target could be:
- Optimistic: ± $56.5 USD
- Neutral: ± $47.9 USD
- Negative: ± $39.4 USD
At least, an EPS of $0.3164 USD is required for the next quarter, to keep the metrics.
In other hand, if an average EV/EBITDA 25 is set, an EBITDA increases of 8%, a Net Debt increases of 0% and Shares Outstanding increases of -0.15%, the potencial forward fair price target could be ± $48.5 USD.
Finally, according to its current P/S ration, a possible spread might be at:
- P/S 5: ± $32 USD
- P/S 10: ± $64 USD
The best analysis is yours!
J. Joel Padilla
https://www.linkedin.com/in/joelpadilla/recent-activity/
https://jjplindex.blogspot.com/
https://jjoelpadilla.wixsite.com/jjpl-index
Copyright: Joel Padilla 2023
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