Monster could be a great addition to a portfolio for the long term, and not because of the stock price getting cut in half. An exceptional balance sheet featuring $2.67 billion in cash and short-term investments and no debt is also a great bonus. And along the way, the company continues to repurchase stock ($707 million worth in 2022, about 1.2% of the current market cap). Overall, Monster's sales should continue to chug higher at a steady pace. However, some of these cost pressures should begin to moderate in 2023, according to management. As a result, the stock trades for a high premium of 46 times trailing 12-month earnings, or 82 times trailing 12-month free cash flow. Paired with inflationary pressures, Monster's profit margins (both GAAP net income and free cash flow) have fallen dramatically over the last two years. Alcohol sales were a small $26.9 million in Q4 2022, but represent a potential new high-growth market for Monster. A flavored malt beverage called The Beast Unleashed was also, uh, unleashed on the market last year. CANArchy has faced profit headwinds since then as Monster has been helping it expand its drink lineup. ![]() Despite a highly competitive energy drink industry (including multiple entries from high-growth upstarts like Celsius Holdings ( CELH 1.31%) over the years), as well as multiple economic downturns, Monster keeps grinding higher.Įarly in 2022, Monster also got itself into the alcohol business with the acquisition of craft beer outfit CANArchy for a small sum of $330 million. If not a stock split, then why buy Monster? If you're interested in owning a steady growth story for the long-term, Monster might be your jam. The real reason you might want to buy Monster stock Thus, it could be highly problematic buying a stock simply because of a recent or upcoming split. If you cut all existing slices of pizza in half, you double the number of slices, but the size of the pie overall remains unchanged. Think of shares of a business like slices of a pizza. However, it's important to note that a lower share price does not change a company's valuation. One big reason, though, is that a "cheaper" stock price attracts lots of investor attention. Shares are up 34% in the last year and are near all-time highs. ![]() Federal Reserve interest rate hikes, and fretting over recession. However, Monster shares have performed quite well in spite of high inflation, aggressive U.S. ![]() It might seem strange that after over a year-plus bear market, a company would announce a stock split. But is this top beverage stock a buy? Why a stock split anyway, and does that make a stock a buy? Some investors might be excited to see a stock split like this, and interest in investing in Monster could make a comeback. The distribution and halved stock price will take place after market close on March 27, 2023. Shareholders as of March 13, 2023, will receive one additional share for every one share they own, and the stock price will be halved to reflect the doubling in share count. Management announced a 2-for-1 stock split during the company's fourth-quarter 2022 earnings update. After nearly doubling in price over the last five years, shares of top energy drink company Monster Beverage ( MNST 1.07%) are getting ready to split.
0 Comments
Leave a Reply. |