Monster Beverage Corp. (NASDAQ:MNST)

CAPS Rating: 3 out of 5

Develops, markets, sells & distributes alternative beverage category natural sodas, fruit juices, energy drinks, fruit juice smoothies & functional drinks, non-carbonated iced teas, lemonades, juice cocktails & children's multi-vitamin juice drinks.

Results 1 - 20 of 330 : 1 2 3 4 5 6 7 8 9 10 Next »

Recs

0
Member Avatar deal4412 (54.25) Submitted: 12/1/2013 6:04:01 PM : Underperform Start Price: $61.64 MNST Score: -6.66

Company earnings have to grow at an annual pace of 20% per year for 10 years to reach its current share price value. It simply wont happen. I don't see significant future growth for the energy drink segment.

Recs

0
Member Avatar XMFYoda (98.24) Submitted: 10/21/2013 3:14:36 PM : Underperform Start Price: $57.40 MNST Score: -10.72

Monster has achieved something pretty impressive, carving out a couple billion in sales, more than double where they were pre-recession, and doing that without debt. But, I think expectations for growth are on the high side, with good chances for disappointment, and so I’m short. There are a few brilliant investors on the long side here, and they might be right, and I might lose on this position. One need look no further than The Coca-Cola Company to understand a lot of money can be made selling sugared, caffeinated, or otherwise modified water. Always do your own homework. Here’s my thinking.

What caught my eye at Monster is a rise in the number of days sales outstanding (DSO). Compare accounts receivable to revenue, and measure the number of days worth of revenue that has piled up as still outstanding receivables. Monster’s DSO has risen year-over-year in six of the last seven quarters. DSO is now around 50, compared to about 40 for The Coca-Cola Company. Think Coca-Cola is too tough a comparison? Dr Pepper Snapple Group consistently has a lower DSO than Coca-Cola.

At the same time as Monster’s DSO has been drifting up, management has been reserving a steadily lower amount of receivables as an allowance for doubtful accounts. In management’s judgment, they aren’t facing a problem of financially stressed customers who might have trouble paying.

It looks like the company might be using extended payment terms as a tactic to increase sales. They could be offering customers more time to pay the bill for making larger or earlier purchases. It can be a relatively easy sale for a regular customer who would have bought those extra drinks eventually anyway. But, the practice equates to selling a drink today that you would have sold tomorrow, and when the customer would normally have come to buy tomorrow’s drink, he doesn’t, because he already bought it. Such a tactic borrows from future sales to boost current sales.

Alternatively, it could be that an increasing percentage of sales are being made late in the quarter. As it is the receivables at quarter-end that are reported, if payment is due in 40 days, but extra sales are made within less than 40 days of the end of the quarter, that would increase the receivables relative to revenue and increase the DSO. If the timing of sales is creeping later in the quarter on average, and if that trend continues, then eventually some sales will creep right past a quarter and reduce reported revenue.

Meanwhile, Monster’s promotional and other allowances have been rising faster than sales, suggesting it is getting harder to grow sales, requiring increasing rates of discounting, shelf space fees, etc. And, the company now says to expect capital expenditures to stay under $100 million for the year following the June quarter, a doubling of the $50 million amount reported for the previous 12-month period. For a company that contracts out its manufacturing, that’s a big increase. Sounds like they think they need a rather large number of promotional vehicles.

In spite of these signs of headwinds, Monster is loading up on raw materials, which are up 35% year over year, when revenue has only grown 6.5%. It seems management is positioning for a growth spurt, possibly hoping the current lack of fast growth is a simply a result of the debate on the safety of its drinks.

Monster has been dogged by legal battles over whether or not its drinks are safe. While it is good for a company to take safety issues seriously, I think the impact of these battles on the pace of revenue growth might be overestimated. When you sell a drink called Monster Energy, and your advertising uses rock stars, vampires and motocross, I don’t know how much your target end customer is going to avoid you on account of allegations regarding the safety of your caffeine levels, particularly with the company emphasizing that their drinks have half the caffeine of coffee.

Monster’s stock is expensive, selling at an enterprise value over 4 times revenue and over 30 times earnings. Such pricing makes sense if you expect fast growth, and analysts are expecting double-digit revenue growth, even after the last two quarters of year over year growth in quarterly revenue both came in at 6.5%.

Management is going to try to jump the hole it has dug letting DSO rise. I think the combination of high expectations, high DSO, and high valuation looks like a setup for disappointment.

Even if Monster’s stock craters on disappointing growth, the company is unlikely to take a mortal wound. With no debt and good cash generation, Monster is worth something. One buyer that may well swoop in at some point is Coca-Cola itself, already responsible for distributing 30% of Monster’s sales.

Recs

0
Member Avatar TMFTypeoh (78.76) Submitted: 10/20/2013 9:32:29 PM : Outperform Start Price: $57.96 MNST Score: +9.70

Long term winner, lots of room for future growth, and Tom e super stock.

Recs

0
Member Avatar MajorBob04 (98.98) Submitted: 10/2/2013 10:37:52 AM : Outperform Start Price: $52.00 MNST Score: +19.02

Monster is well run and continues to innovate. They will manage profits as revenues rise and fall. Long-term price will reflect these fundamentals.

Recs

0
Member Avatar SqwiiTrader (37.30) Submitted: 9/26/2013 9:05:19 AM : Underperform Start Price: $54.40 MNST Score: -14.09

Shorting this to monster death

Recs

0
Member Avatar XMFChaodan (73.26) Submitted: 7/26/2013 2:14:35 PM : Outperform Start Price: $63.07 MNST Score: -3.44

Ridiculous 80% margins on the business. Currently, Monster has a dark cloud over it due to various lawsuits. However, it should be able to come out of them fine. The claims against Monster are coming from people with pre-existing health conditions who were drinking the drink many more times a day for an extended period of time than your average drinker. Even though this is a tragic situation, we must not lose sight of the fact that the same can happen if you overdose on french fries or Coca-Cola.

Recs

0
Member Avatar Teacherman333 (71.75) Submitted: 7/25/2013 1:48:09 PM : Outperform Start Price: $53.70 MNST Score: +11.58

For reference point and to allow for comments by others. As of the end of March, 2013.

ROE 37.02%
Trailing PE 34.60
PB 14.93
Div yield N/A

Recs

0
Member Avatar TMFEBCapital (< 20) Submitted: 7/24/2013 10:24:49 AM : Outperform Start Price: $63.68 MNST Score: -4.39

Expansion into new markets, such as India, and new products, such as protein shakes, offer revenue growth.

Recs

0
Member Avatar RicanMath (37.61) Submitted: 6/18/2013 12:26:05 PM : Outperform Start Price: $59.99 MNST Score: -0.09

Energy drink maker that essentially is able to charge a premium for the same expense as traditional soft drinks. Company's drink mix and marketing are sound. Again, ROE and revenue growth have been consistent for years.

Recs

0
Member Avatar Scalius2000 (33.90) Submitted: 5/8/2013 10:45:03 PM : Underperform Start Price: $51.25 MNST Score: -17.64

Out of *flavor* in the short term.

Recs

0
Member Avatar swedenclunk (< 20) Submitted: 4/11/2013 3:48:48 AM : Outperform Start Price: $55.07 MNST Score: +5.21

overseas operation will get over teathing problems and start to hit targets

Recs

0
Member Avatar FOOLIN7 (87.02) Submitted: 4/5/2013 3:20:00 PM : Outperform Start Price: $49.66 MNST Score: +15.57

SS#14

Recs

3
Member Avatar TMFJLo (86.26) Submitted: 1/18/2013 5:32:21 PM : Underperform Start Price: $49.33 MNST Score: -11.23

A new government survey suggests that emergency room visits caused by energy drink overconsumption have doubled from 2007 to 2011 alone. The Substance Abuse and Mental Health Services Administration links large amounts of caffeine, like that found in energy drinks, to insomnia, nervousness, headache, fast heartbeat, and even seizures.

More than 90% of MNST's products are tagged as energy drinks. It owns 40% of energy drinks' $19 billion market share and sales and profits have shot up in recent years.

Call me contrarian, read my full bearish take here: http://bit.ly/XK4fgH

Recs

0
Member Avatar dvena (57.63) Submitted: 10/26/2012 9:52:36 PM : Outperform Start Price: $45.89 MNST Score: +16.90

The reports of deaths in the same breath as MNST has investors fleeing for the exits. The problem with that thinking is that the amount of caffeine consumed is less in many cases than espresso. I do not expect any legislation to ban coffee etc, so this sell off is extremely overdone. The lemmings will be back once the fear is gone and the greedy will prevail over the fearful.

Recs

1
Member Avatar TMFHumbleServant (96.62) Submitted: 10/23/2012 1:05:58 PM : Outperform Start Price: $40.87 MNST Score: +33.74

The sell off is overdone. It may go down a little more in the short term. But 5 years from now, it will be much higher.

Recs

1
Member Avatar Treborn822 (87.89) Submitted: 10/22/2012 7:48:31 PM : Outperform Start Price: $44.55 MNST Score: +20.24

Oversold

Recs

0
Member Avatar prstout (86.13) Submitted: 10/22/2012 2:39:06 PM : Outperform Start Price: $47.49 MNST Score: +11.62

News based sell-off looks over done.

Recs

1
Member Avatar TeenStockPicker (76.35) Submitted: 10/11/2012 1:47:55 PM : Outperform Start Price: $54.27 MNST Score: -5.49

This is the bevarge of the younger generation and earnings will continue to grow. The only thing that scares me is government regulations and taxes.

Recs

0
Member Avatar jimaster (< 20) Submitted: 9/23/2012 11:02:31 AM : Outperform Start Price: $54.13 MNST Score: -3.62

liquid intake is the new 'juicing"

Recs

0
Member Avatar beefangusbeef (82.77) Submitted: 9/7/2012 10:55:21 AM : Outperform Start Price: $57.91 MNST Score: -12.67

Still room. Still addictive. Still Monster.

Featured Broker Partners


Advertisement