Monster Energy is not Your Casual Can of Coke
Last week, Monster Energy (MNST) saw a +1,000% increase in search traffic from institutional advisors.
We found that intriguing considering the company reported earnings the week before. Did these players know something we didn’t? A quick look at the company’s valuation suggests it’s pricey.
Previously known as Hansen Beverage, Monster energy markets and distributes energy drinks and alternative beverages. In 2015, Monster signed a deal with The Coca-Cola Company (KO). Coke took a 16.7% equity stake in Monster while transferring ownership of its global energy drink business. That included brands like NOS and Full Throttle. In exchange, Monster gave Coke its non-energy business.
Energy Drinks (93.6% of sales): Their largest segment by a mile, Energy drinks is exactly what you think it is - Monster Energy drinks. This segment also includes their former direct store delivery segments excluding the Peach Tea Brand.
Energy drinks are immensely popular. The global market was valued at $57 billion in 2020 and expected to grow at a compounded annual rate of 7% through 2025. Monster has outpaced that with a 5-year average growth rate a bit higher than 11%.
In fact, their growth rate is pretty consistent YoY, never breaking below 9%. Margins also remained pretty steady, though gross margin has declined from 63.7% in 2016 to 57.9% in the last 12 months.
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