Should You Buy Monster Beverage Stock At $55?

February 28th, 2025 by Trefis Team

Monster Beverage (NASDAQ:MNST) recently reported its Q4 results with earnings of $0.38 per share, matching the previous year’s quarter and meeting analyst expectations. Sales reached $1.81 billion, representing a 4.7% year-over-year increase and exceeding the consensus estimate of $1.79 billion.

The company’s growth was supported by price increases for its energy drinks in the U.S. market. The company reported a 0.7% year-over-year sales increase in the U.S., and an 11.7% increase in sales outside the U.S. Breaking Monster Beverage Revenues down by segments:

  • Monster energy drinks: $1.67 billion, up 4.5%
  • Strategic brands: $102 million, up 11.1%
  • Alcohol brands: $35 million, down 0.8%
  • Other: $5 million, up 4.6%

Monster improved its adjusted gross margin by 100 basis points to 55.5% in Q4, while the adjusted operating margin increased to 28.6% from 27.8% in the prior-year quarter.

The company invested approximately $4 billion in share repurchases over the past year, resulting in a 7% reduction in total outstanding shares. Despite higher revenues, margin improvements, and fewer shares, earnings per share remained flat year-over-year, partly due to increased tax provisions.

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Turning our focus to MNST stock, it has delivered a -10% return since the beginning of 2024, significantly underperforming the broader S&P 500, which is up 24%. This lag can largely be attributed to a slowdown in the U.S. energy drinks market, as consumers continue to grapple with high inflation.

Looking ahead, we see limited growth potential for MNST. Currently priced around $55, the stock trades at 7.3x trailing revenues— slightly below its three-year average P/S ratio of 8.1x — making a downward adjustment to its valuation multiple appear justified. Additionally, recent tariffs imposed by President Trump are likely to drive up inflation, leaving consumers with little near-term relief. Food-at-home prices, for instance, are forecast to rise by 3.3% in 2025, further pressuring consumer spending. This environment does not bode well for overall demand in the energy drinks market, especially among lower-income consumers. We assess that MNST stock, at its present trading level of around $55, is appropriately valued.

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