Monster Beverage’s Growth Slows in Q3, and Risks Remain; Stock Still Overvalued
We don’t plan to make major adjustments to our $118 fair value estimate for narrow-moat Monster Beverage following disappointing third-quarter results. Revenue growth slowed to just 4% year over year; admittedly, comparisons were challenging, given pulled-forward demand ahead of an announced product price increase a year ago, but the company is nonetheless trailing our full-year forecast for low-teens revenue gains. Similarly, the firm’s operating profitability was dented by increasing selling a...Monster Beverage is a holding company. Through its subsidiaries, the company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages. The company has the following operating and reportable segments: Monster Energy? Drinks segment, which is primarily comprised of the company's Monster Energy? drinks and Reign Total Body Fuel? energy drinks; Strategic Brands segment, which is comprised primarily of the various energy drink brands from The Coca-Cola Company, as well as its energy drinks; and Other segment, which is comprised of certain prod ucts sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary, to independent third-party customers.
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