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Monster Beverage Corp Valuation – February 2019 $MNST

Company Profile (excerpt from Reuters): Monster Beverage Corporation, incorporated on August 12, 2014, develops, markets, sells and distributes energy drink beverages, sodas and/or concentrates for energy drink beverages, primarily under various brand names, including Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, Muscle Monster, Mega Monster Energy, Punch Monster, Juice Monster, Ubermonster, BU, Mutant Super Soda, Nalu, NOS, Burn, Mother, Ultra, Play and Power Play, Gladiator, Relentless, Samurai, BPM and Full Throttle. The Company has three segments: Monster Energy Drinks segment, which consists of its Monster Energy drinks, as well as Mutant Super Soda drinks; Strategic Brands segment, which includes various energy drink brands owned through The Coca-Cola Company (TCCC), and Other segment (Other), which includes the American Fruits & Flavors (AFF) third-party products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MNST – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $31,972,320,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.28 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 242.61% Pass
6. Moderate PEmg Ratio PEmg < 20 42.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.32 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.28 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.37
MG Growth Estimate 14.50%
MG Value $51.42
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $19.88
MG Value based on 0% Growth $11.66
Market Implied Growth Rate 16.83%
Current Price $57.82
% of Intrinsic Value 112.45%

Monster Beverage Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.7 in 2014 to an estimated $1.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.83% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Monster Beverage Corp revealed the company was trading above its Graham Number of $16.22. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 42.16, which was above the industry average of 26.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.1.

Monster Beverage Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.10
Graham Number $16.22
PEmg 42.16
Current Ratio 3.28
PB Ratio 8.32
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,152,671,000
Total Current Liabilities $656,362,000
Long-Term Debt $0
Total Assets $4,871,359,000
Intangible Assets $2,373,891,000
Total Liabilities $978,092,000
Shares Outstanding (Diluted Average) 559,955,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Dec2017 $1.42
Dec2016 $1.19
Dec2015 $0.95
Dec2014 $0.92
Dec2013 $0.65
Dec2012 $0.62
Dec2011 $0.51
Dec2010 $0.38
Dec2009 $0.37
Dec2008 $0.19
Dec2007 $0.25
Dec2006 $0.17
Dec2005 $0.11
Dec2004 $0.04
Dec2003 $0.01
Dec2002 $0.01
Dec2001 $0.01
Dec2000 $0.01
Dec1999 $0.01
Dec1998 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.37
Dec2017 $1.15
Dec2016 $0.96
Dec2015 $0.81
Dec2014 $0.70
Dec2013 $0.56
Dec2012 $0.48
Dec2011 $0.39
Dec2010 $0.31
Dec2009 $0.25
Dec2008 $0.18
Dec2007 $0.16
Dec2006 $0.09
Dec2005 $0.05
Dec2004 $0.02
Dec2003 $0.01
Dec2002 $0.01

Recommended Reading:

Other ModernGraham posts about the company

Monster Beverage Corp Valuation – April 2018 $MNST
Monster Beverage Corp Valuation – July 2016 $MNST
Monster Beverage Corp Valuation – January 2016 Update $MNST
Monster Beverage Corporation Analysis – October 2015 Update $MNST
Monster Beverage Analysis – July 2015 Update $MNST

Other ModernGraham posts about related companies

Campbell Soup Co Valuation – January 2019 $CPB
Kellogg Co Valuation – January 2019 $K
PepsiCo Inc Valuation – January 2019 $PEP
The Hershey Co Valuation – January 2019 $HSY
Coca-Cola Co Valuation – November 2018 $KO
Calavo Growers Inc Valuation – October 2018 $CVGW
Lancaster Colony Corp Valuation – August 2018 $LANC
SpartanNash Co Valuation – August 2018 $SPTN
Core-Mark Holding Co Inc Valuation – August 2018 $CORE
J&J Snack Foods Corp Valuation – August 2018 $JJSF

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Monster Beverage Corp Valuation – April 2018 $MNST

Company Profile (excerpt from Reuters): Monster Beverage Corporation, incorporated on August 12, 2014, develops, markets, sells and distributes energy drink beverages, sodas and/or concentrates for energy drink beverages, primarily under various brand names, including Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, Muscle Monster, Mega Monster Energy, Punch Monster, Juice Monster, Ubermonster, BU, Mutant Super Soda, Nalu, NOS, Burn, Mother, Ultra, Play and Power Play, Gladiator, Relentless, Samurai, BPM and Full Throttle. The Company has three segments: Monster Energy Drinks segment, which consists of its Monster Energy drinks, as well as Mutant Super Soda drinks; Strategic Brands segment, which includes various energy drink brands owned through The Coca-Cola Company (TCCC), and Other segment (Other), which includes the American Fruits & Flavors (AFF) third-party products.

MNST Chart

MNST data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MNST – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $31,565,625,100 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.72 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 241.02% Pass
6. Moderate PEmg Ratio PEmg < 20 41.60 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.38 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.72 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.36
MG Growth Estimate 14.35%
MG Value $50.78
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $19.79
MG Value based on 0% Growth $11.60
Market Implied Growth Rate 16.55%
Current Price $56.77
% of Intrinsic Value 111.80%

Monster Beverage Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.7 in 2014 to an estimated $1.36 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.55% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Monster Beverage Corporation revealed the company was trading above its Graham Number of $16.12. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 41.6, which was above the industry average of 32.55. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.07.

Monster Beverage Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.07
Graham Number $16.12
PEmg 41.60
Current Ratio 3.72
PB Ratio 8.38
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,086,377,000
Total Current Liabilities $560,351,000
Long-Term Debt $0
Total Assets $4,791,012,000
Intangible Assets $2,365,728,000
Total Liabilities $895,800,000
Shares Outstanding (Diluted Average) 574,672,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.68
Dec2017 $1.42
Dec2016 $1.19
Dec2015 $0.95
Dec2014 $0.92
Dec2013 $0.65
Dec2012 $0.62
Dec2011 $0.51
Dec2010 $0.38
Dec2009 $0.37
Dec2008 $0.19
Dec2007 $0.25
Dec2006 $0.17
Dec2005 $0.11
Dec2004 $0.04
Dec2003 $0.01
Dec2002 $0.01
Dec2001 $0.01
Dec2000 $0.01
Dec1999 $0.01
Dec1998 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.36
Dec2017 $1.15
Dec2016 $0.96
Dec2015 $0.81
Dec2014 $0.70
Dec2013 $0.56
Dec2012 $0.48
Dec2011 $0.39
Dec2010 $0.31
Dec2009 $0.25
Dec2008 $0.18
Dec2007 $0.16
Dec2006 $0.09
Dec2005 $0.05
Dec2004 $0.02
Dec2003 $0.01
Dec2002 $0.01

Recommended Reading:

Other ModernGraham posts about the company

Monster Beverage Corp Valuation – July 2016 $MNST
Monster Beverage Corp Valuation – January 2016 Update $MNST
Monster Beverage Corporation Analysis – October 2015 Update $MNST
Monster Beverage Analysis – July 2015 Update $MNST
24 Companies in the Spotlight This Week – 3/28/15

Other ModernGraham posts about related companies

Campbell Soup Co Valuation – March 2018 $CPB
Kellogg Company Valuation – March 2018 $K
Hershey Co Valuation – March 2018 $HSY
PepsiCo Inc Valuation – March 2018 $PEP
The Coca-Cola Co Valuation – February 2018 $KO
Campbell Soup Company Valuation – September 2017 $CPB
Post Holdings Inc Valuation – Initial Coverage $POST
Dean Foods Co Valuation – Initial Coverage $DF
George Weston Limited Valuation – Initial Coverage $TSE:WN
Tyson Foods Inc Valuation – July 2017 $TSN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Monster Beverage Corp Valuation – July 2016 $MNST

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Monster Beverage Corp (MNST) fares in the ModernGraham valuation model.

 

[level-free]
MNST Chart

MNST data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MNST – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $32,206,626,900 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.02 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 285.51% Pass
6. Moderate PEmg Ratio PEmg < 20 53.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.53 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 7.02 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MNST value chart July 2016

EPSmg $2.93
MG Growth Estimate 15.00%
MG Value $112.75
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $42.47
MG Value based on 0% Growth $24.89
Market Implied Growth Rate 22.64%
Current Price $157.51
% of Intrinsic Value 139.69%

Monster Beverage Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.44 in 2012 to an estimated $2.93 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 22.64% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Monster Beverage Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

MNST charts July 2016

Net Current Asset Value (NCAV) $14.02
Graham Number $45.24
PEmg 53.78
Current Ratio 7.02
PB Ratio 6.53
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $3,792,872,000
Total Current Liabilities $540,655,000
Long-Term Debt $0
Total Assets $5,883,484,000
Intangible Assets $1,708,293,000
Total Liabilities $891,638,000
Shares Outstanding (Diluted Average) 206,908,000

Earnings Per Share History

Next Fiscal Year Estimate $3.70
Dec2015 $2.84
Dec2014 $2.77
Dec2013 $1.95
Dec2012 $1.86
Dec2011 $1.53
Dec2010 $1.14
Dec2009 $1.11
Dec2008 $0.56
Dec2007 $0.76
Dec2006 $0.50
Dec2005 $0.32
Dec2004 $0.11
Dec2003 $0.03
Dec2002 $0.02
Dec2001 $0.02
Dec2000 $0.02
Dec1999 $0.03
Dec1998 $0.02
Dec1997 $0.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.93
Dec2015 $2.43
Dec2014 $2.10
Dec2013 $1.68
Dec2012 $1.44
Dec2011 $1.16
Dec2010 $0.92
Dec2009 $0.75
Dec2008 $0.54
Dec2007 $0.47
Dec2006 $0.28
Dec2005 $0.15
Dec2004 $0.05
Dec2003 $0.02
Dec2002 $0.02
Dec2001 $0.02
Dec2000 $0.02

Recommended Reading:

Other ModernGraham posts about the company

Monster Beverage Corp Valuation – January 2016 Update $MNST
Monster Beverage Corporation Analysis – October 2015 Update $MNST
Monster Beverage Analysis – July 2015 Update $MNST
24 Companies in the Spotlight This Week – 3/28/15
Monster Beverage Corporation Quarterly Valuation – March 2015 $MNST

Other ModernGraham posts about related companies

Campbell Soup Company Valuation – July 2016 $CPB
Kellogg Company Valuation – July 2016 $K
Hershey Co Valuation – July 2016 $HSY
PepsiCo Inc Valuation – July 2016 $PEP
Mead Johnson Nutrition Valuation – June 2016 $MJN
B&G Foods Inc Valuation – March 2016 $BGS
Hormel Foods Corp Stock Valuation – February 2016 $HRL
J.M. Smucker Co Valuation – February 2016 $SJM
Archer-Daniels Midland Co Valuation – February 2016 $ADM
Keurig Green Mountain Inc Valuation – January 2016 Update $GMCR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Monster Beverage Corp Valuation – January 2016 Update $MNST

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Monster Beverage Corp (MNST) fares in the ModernGraham valuation model.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MNST

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $29,224,403,500 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.43 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 323.27% Pass
6. Moderate PEmg Ratio PEmg < 20 57.13 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.26 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 7.43 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MNST value chart January 2016

EPSmg $2.45
MG Growth Estimate 15.00%
MG Value $94.40
Opinion Overvalued
MG Value based on 3% Growth $35.55
MG Value based on 0% Growth $20.84
Market Implied Growth Rate 24.32%
Current Price $140.09
% of Intrinsic Value 148.40%

Monster Beverage Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the lack of dividends along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.16 in 2011 to an estimated $2.45 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 24.32% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Monster Beverage Corp (MNST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MNST charts January 2016

Net Current Asset Value (NCAV) $13.46
Graham Number $38.84
PEmg 57.13
Current Ratio 7.43
PB Ratio 6.26
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $3,750,647,000
Total Current Liabilities $504,606,000
Long-Term Debt $0
Total Assets $5,603,738,000
Intangible Assets $1,715,978,000
Total Liabilities $949,181,000
Shares Outstanding (Diluted Average) 208,094,000

Earnings Per Share History

Next Fiscal Year Estimate $2.92
Dec14 $2.77
Dec13 $1.95
Dec12 $1.86
Dec11 $1.53
Dec10 $1.14
Dec09 $1.11
Dec08 $0.56
Dec07 $0.76
Dec06 $0.50
Dec05 $0.33
Dec04 $0.11
Dec03 $0.03
Dec02 $0.02
Dec01 $0.02
Dec00 $0.02
Dec99 $0.03
Dec98 $0.02
Dec97 $0.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.45
Dec14 $2.10
Dec13 $1.68
Dec12 $1.44
Dec11 $1.16
Dec10 $0.92
Dec09 $0.76
Dec08 $0.54
Dec07 $0.47
Dec06 $0.28
Dec05 $0.15
Dec04 $0.05
Dec03 $0.02
Dec02 $0.02
Dec01 $0.02
Dec00 $0.02
Dec99 $0.02

Recommended Reading:

Other ModernGraham posts about the company

Monster Beverage Corporation Analysis – October 2015 Update $MNST
Monster Beverage Analysis – July 2015 Update $MNST
24 Companies in the Spotlight This Week – 3/28/15
Monster Beverage Corporation Quarterly Valuation – March 2015 $MNST
27 Companies in the Spotlight This Week – 12/20/14

Other ModernGraham posts about related companies

Mead Johnson Nutrition Co Valuation – November 2015 Update $MJN
Archer Daniels Midland Valuation – November 2015 Update $ADM
The Best Companies of the Food Processing Industry – October 2015
J.M. Smucker Company Valuation – October 2015 Update $SJM
Keurig Green Mountain Inc. Valuation – October 2015 Update $GMCR
Monster Beverage Corporation Analysis – October 2015 Update $MNST
B&G Foods Inc. Analysis – September 2015 Update $BGS
Hormel Foods Corporation Analysis – September 2015 Update $HRL
Dr Pepper Snapple Group Inc Analysis – September 2015 Update $DPS
Sysco Corporation Analysis – September 2015 Update $SYY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Monster Beverage Corporation Analysis – October 2015 Update $MNST

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – September 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Monster Beverage Corporation (MNST) fares in the ModernGraham valuation model.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MNST – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $27,766,953,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.97 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 316.62% Pass
6. Moderate PEmg Ratio PEmg < 20 55.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.03 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 7.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MNST value Chart October 2015

EPSmg $2.41
MG Growth Estimate 15.00%
MG Value $92.86
Opinion Overvalued
MG Value based on 3% Growth $34.97
MG Value based on 0% Growth $20.50
Market Implied Growth Rate 23.66%
Current Price $134.62
% of Intrinsic Value 144.97%

Monster Beverage Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned by lack of dividends and the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.16 in 2011 to an estimated $2.41 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 23.66% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Monster Beverage Corporation (MNST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MNST Charts October 2015

Net Current Asset Value (NCAV) $16.46
Graham Number $38.70
PEmg 55.81
Current Ratio 7.97
PB Ratio 5.03
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $3,922,379,000
Total Current Liabilities $491,927,000
Long-Term Debt $0
Total Assets $5,791,581,000
Intangible Assets $1,715,943,000
Total Liabilities $936,761,000
Shares Outstanding (Diluted Average) 181,417,000

Earnings Per Share History

Next Fiscal Year Estimate $2.80
Dec14 $2.77
Dec13 $1.95
Dec12 $1.86
Dec11 $1.53
Dec10 $1.14
Dec09 $1.11
Dec08 $0.56
Dec07 $0.76
Dec06 $0.50
Dec05 $0.33
Dec04 $0.11
Dec03 $0.03
Dec02 $0.02
Dec01 $0.02
Dec00 $0.02
Dec99 $0.03
Dec98 $0.02
Dec97 $0.01
Dec96 $0.00
Dec95 -$0.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.41
Dec14 $2.10
Dec13 $1.68
Dec12 $1.44
Dec11 $1.16
Dec10 $0.92
Dec09 $0.76
Dec08 $0.54
Dec07 $0.47
Dec06 $0.28
Dec05 $0.15
Dec04 $0.05
Dec03 $0.02
Dec02 $0.02
Dec01 $0.02
Dec00 $0.02
Dec99 $0.02

Recommended Reading:

Other ModernGraham posts about the company

Monster Beverage Analysis – July 2015 Update $MNST
24 Companies in the Spotlight This Week – 3/28/15
Monster Beverage Corporation Quarterly Valuation – March 2015 $MNST
27 Companies in the Spotlight This Week – 12/20/14
Monster Beverage Corporation Quarterly Valuation – December 2014 $MNST

Other ModernGraham posts about related companies

B&G Foods Inc. Analysis – September 2015 Update $BGS
Hormel Foods Corporation Analysis – September 2015 Update $HRL
Dr Pepper Snapple Group Inc Analysis – September 2015 Update $DPS
Sysco Corporation Analysis – September 2015 Update $SYY
Coca-Cola Enterprises Inc. Analysis – September 2015 Update $CCE
Mead Johnson Nutrition Analysis – August 2015 Update $MJN
McCormick & Company Inc. Analysis – August 2015 Update $MKC
ConAgra Foods Inc. Analysis – August 2015 Update $CAG
Archer Daniels Midland Company Analysis – 2015 Update $ADM
J.M. Smucker Company Analysis – July 2015 Update $SJM

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Monster Beverage Analysis – July 2015 Update $MNST

Monster_LogoMonster Beverage (MNST) has shown some earnings growth over the last few years, which may garner some attention from prospective investors. For example, Seeking Alpha contributor The Specialist recently provided an opinion regarding the company’s growth prospects, while Jeroen Jongbloed wrote in detail about the effects of Coca-Cola’s (KO) involvement with the company. These are great qualitative considerations to keep in mind, but it is critical to first conduct a quantitative analysis of the company.

Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits.

The model is inspired by the teachings of Benjamin Graham, and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation, in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

MNST Chart

MNST data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – Earnings per share has increased by at least one-third over the last 10 years, using three-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) Ratio – PEmg is less than 20 – FAIL
  7. Moderate Price-to-Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass at least 4 of the following 5 tests to be suitable for a Defensive Investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – FAIL
  5. Earnings Growth – EPSmg greater than that 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $140.88
MG Value $96.58
MG Opinion Overvalued
Value Based on 3% Growth $36.38
Value Based on 0% Growth $21.32
Market Implied Growth Rate 23.83%
Net Current Asset Value (NCAV) $7.05
PEmg 56.16
Current Ratio 3.36
PB Ratio 16.68

Balance Sheet – March 2015

Current Assets $1,842,000,000
Current Liabilities $549,000,000
Total Debt $0
Total Assets $2,085,000,000
Intangible Assets $52,000,000
Total Liabilities $617,000,000
Outstanding Shares 173,800,000

Earnings Per Share

2015 (estimate) $3.09
2014 $2.77
2013 $1.95
2012 $1.86
2011 $1.53
2010 $1.14
2009 $1.11
2008 $0.56
2007 $0.76
2006 $0.50
2005 $0.33

Earnings Per Share – ModernGraham

2015 (estimate) $2.51
2014 $2.10
2013 $1.68
2012 $1.44
2011 $1.16
2010 $0.92

Dividend History

Monster Beverage Corporation does not pay a dividend.

Conclusion

Monster Beverage passes the initial requirements of the Enterprising Investor, but not those of the Defensive Investor. Specifically, the Defensive Investor is concerned by the lack of dividends and the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the lack of dividends. As a result, all Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, it has grown its EPSmg (normalized earnings) from $1.16 in 2011 to an estimated $2.51 for 2015. This level of demonstrated growth, while strong, does not support the market’s implied estimate for annual earnings growth of 23.83% over the next 7-10 years.

In recent years, the company’s actual growth in EPSmg has averaged around 23.2% annually, but the ModernGraham valuation model reduces the actual growth to a more conservative figure when making an estimate, and returns an estimate of intrinsic value well below the current price, indicating that Monster Beverage is overvalued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Monster Beverage Corporation Quarterly Valuation – March 2015 $MNST

Monster_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – March 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Monster Beverage Corporation (MNST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Monster Beverage Corporation is a holding company. The Company develop, market, sell and distribute alternative beverage category beverages under the brand names of Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, X-Presso Monster, Muscle Monster, Punch Monster, Hansen’s, Hansen’s Natural Cane Soda, Junior Juice, Blue Sky, Hubert’s, Worx Energy and Peace Tea. The company has two segments, Direct Store Delivery (DSD), whose principal products comprise energy drinks, and Warehouse (Warehouse), whose principal products comprise juice-based and soda beverages. The DSD segment develops, markets and sells products primarily through an exclusive distributor network, whereas the Warehouse segment develops, markets and sells products primarily direct to retailers.
MNST Chart

MNST data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $136.04
MG Value $80.67
MG Opinion Overvalued
Value Based on 3% Growth $30.38
Value Based on 0% Growth $17.81
Market Implied Growth Rate 28.21%
Net Current Asset Value (NCAV) $7.25
PEmg 64.93
Current Ratio 4.76
PB Ratio 15.72

Balance Sheet – December 2014

Current Assets $1,693,000,000
Current Liabilities $356,000,000
Total Debt $0
Total Assets $1,939,000,000
Intangible Assets $51,000,000
Total Liabilities $424,000,000
Outstanding Shares 175,100,000

Earnings Per Share

2014 $2.77
2013 $1.95
2012 $1.86
2011 $1.53
2010 $1.14
2009 $1.11
2008 $0.56
2007 $0.76
2006 $0.50
2005 $0.33
2004 $0.11

Earnings Per Share – ModernGraham

2014 $2.10
2013 $1.68
2012 $1.44
2011 $1.16
2010 $0.92
2009 $0.76

Dividend History
Monster Beverage Corporation does not pay a dividend.

Conclusion:

Monster Beverage Corporation is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the lack of dividends and the high PEmg and PB ratios, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.92 in 2010 to $2.10 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 28.21% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Monster Beverage Corporation (MNST) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Monster Beverage Corporation (MNST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Monster Beverage Corporation (MNST) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Monster Beverage Corporation Quarterly Valuation – December 2014 $MNST

Monster_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – December 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Monster Beverage Corporation (MNST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Monster Beverage Corporation is a holding company. The Company develops, markets, sells and distributes alternative beverage, such as non-carbonated ready-to-drink iced teas, lemonades, juice cocktails, single-serve juices and fruit beverages, ready-to-drink dairy and coffee drinks, energy drinks, sports drinks, and single-serve still water (flavored and unflavored) with beverages, including sodas that are considered natural, sparkling juices and flavored sparkling beverages. It has two reportable segments, namely Direct Store Delivery (DSD), whose principal products comprise energy drinks, and Warehouse (Warehouse), whose principal products comprise juice-based and soda beverages. The DSD segment develops, markets and sells products primarily through an exclusive distributor network. The Warehouse segment develops, markets and sells products directly to retailers.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – FAIL
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $106.24
MG Value $78.36
MG Opinion Overvalued
Value Based on 3% Growth $29.51
Value Based on 0% Growth $17.30
Market Implied Growth Rate 21.85%
Net Current Asset Value (NCAV) $6.55
PEmg 52.20
Current Ratio 4.36
PB Ratio 13.35

Balance Sheet – September 2014

Current Assets $1,617,000,000
Current Liabilities $371,000,000
Total Debt $0
Total Assets $1,863,000,000
Intangible Assets $49,000,000
Total Liabilities $476,000,000
Outstanding Shares 174,300,000

Earnings Per Share

2014 (estimate) $2.59
2013 $1.95
2012 $1.86
2011 $1.53
2010 $1.14
2009 $1.11
2008 $0.56
2007 $0.76
2006 $0.50
2005 $0.33
2004 $0.11

Earnings Per Share – ModernGraham

2014 (estimate) $2.04
2013 $1.68
2012 $1.44
2011 $1.16
2010 $0.92
2009 $0.76

Dividend History
Monster Beverage Corporation does not pay a dividend.

Conclusion:

Monster Beverage Corporation is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the lack of dividends and the high PEmg and PB ratios.  The Enterprising Investor is also concerned by the lack of dividends but has no other issues with the company.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.92 in 2010 to only an estimated $2.04 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 21.85% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Monster Beverage Corporation (MNST) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Monster Beverage Corporation (MNST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Monster Beverage Corporation (MNST) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Monster Beverage Corporation Quarterly Stock Valuation – September 2014 $MNST

Monster_LogoMonster Beverage is suitable for the Enterprising Investor but not the Defensive Investor. The Defensive Investor is concerned with the lack of dividends, and the high PEmg and PB ratios. The Enterprising Investor’s only initial concern is the lack of dividends. As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities. From a valuation perspective, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $0.92 in 2010 to an estimated $2.02 for 2014. This level of demonstrated growth does not support the market’s implied estimate of 18.01% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Read the full valuation on Seeking Alpha!

MNST Chart

MNST data by YCharts

Mondelez International Inc Valuation – March 2019 #MDLZ

Company Profile (excerpt from Reuters): Mondelez International, Inc., incorporated on January 10, 2005, is a snack company. The Company manufactures and markets snack food and beverage products for consumers. The Company operates through four segments: Latin America, Asia, Middle East, and Africa (AMEA), Europe and North America. As of December 31, 2016, its brands spanned five product categories, including Biscuits (including cookies, crackers and salted snacks); Chocolate; Gum and candy; Beverages (including coffee and powdered beverages), and Cheese and grocery. The Company’s portfolio includes various snack brands, including Nabisco, Oreo, LU and belVita biscuits; Cadbury, Milka, Cadbury Dairy Milk and Toblerone chocolate; Trident gum; Halls candy, and Tang powdered beverages.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MDLZ – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $71,479,143,112 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.45 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 7.34% Fail
6. Moderate PEmg Ratio PEmg < 20 22.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.83 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.23
MG Growth Estimate -2.26%
MG Value $8.89
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $32.33
MG Value based on 0% Growth $18.95
Market Implied Growth Rate 6.85%
Current Price $49.50
% of Intrinsic Value 556.80%

MONDELEZ INTERNATIONAL INC Common Stock does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.62 in 2015 to an estimated $2.23 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.85% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into MONDELEZ INTERNATIONAL INC Common Stock revealed the company was trading above its Graham Number of $31.21. The company pays a dividend of $0.96 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 22.2, which was below the industry average of 26.89, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.99.

MONDELEZ INTERNATIONAL INC Common Stock scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.99
Graham Number $31.21
PEmg 22.20
Current Ratio 0.45
PB Ratio 2.83
Current Dividend $0.96
Dividend Yield 1.94%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $7,604,000,000
Total Current Liabilities $16,737,000,000
Long-Term Debt $12,532,000,000
Total Assets $62,729,000,000
Intangible Assets $38,727,000,000
Total Liabilities $37,016,000,000
Shares Outstanding (Diluted Average) 1,471,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.45
Dec2018 $2.28
Dec2017 $1.85
Dec2016 $1.04
Dec2015 $4.44
Dec2014 $1.28
Dec2013 $2.19
Dec2012 $1.73
Dec2011 $2.01
Dec2010 $2.39
Dec2009 $2.03
Dec2008 $1.90
Dec2007 $1.62
Dec2006 $1.85
Dec2005 $1.55
Dec2004 $1.55
Dec2003 $2.01
Dec2002 $1.96
Dec2001 $1.17
Dec2000 $1.38
Dec1999 $1.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.23
Dec2018 $2.14
Dec2017 $2.10
Dec2016 $2.19
Dec2015 $2.62
Dec2014 $1.78
Dec2013 $2.05
Dec2012 $1.99
Dec2011 $2.07
Dec2010 $2.06
Dec2009 $1.86
Dec2008 $1.75
Dec2007 $1.68
Dec2006 $1.74
Dec2005 $1.67
Dec2004 $1.69
Dec2003 $1.69

Recommended Reading:

Other ModernGraham posts about the company

Mondelez International Inc Valuation – June 2018 $MDLZ
Mondelez International Inc Valuation – March 2017 $MDLZ
Mondelez International Inc Valuation – August 2016 $MDLZ
5 Speculative and Overvalued Companies to Avoid – July 2015
Mondelez International Inc. Analysis – 2015 Update $MDLZ

Other ModernGraham posts about related companies

JM Smucker Co Valuation – March 2019 #SJM
Lamb Weston Holdings Inc Valuation – March 2019 #LW
Kraft Heinz Co Valuation – March 2019 #KHC
Sysco Corp Valuation – March 2019 $SYY
General Mills Inc Valuation – February 2019 $GIS
McCormick & Co Valuation – February 2019 $MKC
Archer-Daniels Midland Co Valuation – February 2019 $ADM
Conagra Brands Inc Valuation – February 2019 $CAG
Monster Beverage Corp Valuation – February 2019 $MNST
Campbell Soup Co Valuation – January 2019 $CPB

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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