By Alex Planes, Sean Williams, and Travis Hoium, The Motley Fool
Filed under: Investing
The Motley Fool has been making successful stock picks for many years, but we don’t always agree on what a great stock looks like. That’s what makes us “motley,” and it’s one of our core values. We can disagree respectfully, as we often do. Investors do better when they share their knowledge.
In that spirit, we three Fools have banded together to find the market‘s best and worst stocks, which we’ll rate on The Motley Fool’s CAPS system as outperformers or underperformers. We’ll be accountable for every pick based on the sum of our knowledge and the balance of our decisions. Today, we’ll be discussing Monster Beverage , the largest publicly traded energy drink purveyor in the world.
Monster by the numbers
Here’s a quick snapshot of the company’s most important numbers:
|
Statistic |
Result (TTM or Most Recent Available) |
|---|---|
|
Market Cap |
$8.1 billion |
|
P/E and forward P/E |
26.2 and 16.4 |
|
Revenue |
$2.1 billion |
|
Operating margin |
26.7% |
|
Net income |
$340 million |
|
Free cash flow |
$238 million |
|
Cash and investments |
$320 million |
|
Sales by customer type |
|
|
Case sales (192-ounce cases) |
|
|
U.S. alternative* beverage market share |
4.7% |
|
Key competitors |
|
Sources: Morningstar, corporate reports, Net Applications, and press releases.
* Includes ready-to-drink iced tea, lemonade, juice and fruit beverages, dairy and coffee drinks, sports drinks,” natural” sodas, flavored sparkling beverages, single-serve water, and energy drinks.
Alex’s take
I’ve had my eye on Monster for some time, but I found it to be too pricey an opportunity last year as its P/E soared toward bubbly territory:
Source: MNST P/E Ratio TTM data by YCharts.
However, now that investors have backed away — a flight that began, contrary to what you may think, well before the legal challenges over several purported deaths — Monster is starting to look a bit more palatable. With the exception of a brief period after the financial crash and in early 2010, Monster’s valuation hasn’t been this low in a decade. Is this an opportunity or the warning sign of a pending sales slowdown? While Monster didn’t offer up any annual guidance for its 2013 fiscal year, we can extrapolate its growth rate from analyst estimates:
|
Year |
Revenue Growth* |
Net Income Growth* |
|---|---|---|
|
2009 |
11% |
94% |
|
2010 |
14% |
1% |
|
2011 |
31% |
35% |
|
2012 |
21% |
19% |
|
2013 (estimated ) |
13% |
22% |
Sources: Morningstar, Yahoo! Finance. * Year-over-year growth rate.
Monster can’t keep up its monster (pardon the pun) growth rates forever. The energy drink segment is reaching maturity in the American market, according to a Nielsen report on a 13-week sales period that ended in mid-February. During this period, …read more
Source: FULL ARTICLE at DailyFinance