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MNST – Market expectations are for record-high Uniform ROA, but management may be concerned about product launches, market share, and energy drink demand

May 11, 2021

  • Monster Beverage Corporation (MNST:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 36.1x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about new product launches, their ability to gain market share in Argentina, and softness in performance energy drinks
  • Specifically, management may lack confidence in their ability to improve overall sales during the pandemic, mitigate gross profit margin declines, and gain market share in Argentina. Furthermore, they may have concerns about the potential of their core Monster Ultra flavor launch and softness in the performance Energy category. Moreover, management may lack confidence in their ability to increase SKUs across various countries and cater to country-specific customers’ appetite, and they may have concerns about competitive pressures in the alcohol category