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.

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