Monster Beverage Corporation MNST is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 29.19x, which positions it at a premium compared with the industry’s average of 18.25x and the S&P 500's 18.56x. The stock is also trading above its median P/E level of 28.10x, observed in the past year. The valuation suggests that Monster Beverage is overvalued.

MNST Stock's Valuation

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The recent rally might have pushed Monster Beverage’s valuation higher. Its shares have rallied 10.2% in six months, outpacing the industry’s decline of 6%.

MNST Stock's Price Performance

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Tailwinds Behind MNST Stock’s Momentum

Leveraging its strength in the energy drinks category, Monster Beverage continues to drive robust performance through its diverse and expanding portfolio of energy drink brands. The company’s wide-ranging offerings, including flagship Monster Energy, Reign Total Body Fuel, Java Monster, Monster Hydro and NOS, among others, have positioned it as a leader in the global energy drink space.

In fourth-quarter 2024, the Monster Energy Drinks segment posted net sales growth of 4.5% year over year, with a currency-adjusted increase of 7.6%, underscoring the brand’s resilience and momentum. According to Nielsen, the global energy drink category remains vibrant, with renewed growth in the United States, particularly across convenience stores and other retail channels. For the 13 weeks ended Feb. 15, 2025, U.S. energy drink sales climbed 6.2%, reinforcing Monster’s foothold in its home market.

Monster Beverage is not only driving top-line growth but also delivering strong margin expansion, highlighting its solid operational execution and cost management capabilities. Gross margin improved year over year, reflecting enhanced cost efficiencies and operational improvements. Sequentially, margins also strengthened compared to the prior quarter, highlighting ongoing progress. The reduction in input costs has been a key factor in boosting profitability, helping Monster sustain solid financial performance despite regional sales variations.

Monster Beverage has been benefiting from the expansion of the energy drinks category and product launches. Despite hurricanes, wildfires and weather-related disruptions, the company delivered sustained growth across key retail channels, demonstrating strong operational resilience in fourth-quarter 2024. Moreover, sales saw record highs, driven by momentum in international markets, with notable growth in regions across Europe, Asia-Pacific and Latin America.

The company's commitment to product innovation remains a key pillar of Monster Beverage's success and growth strategy. In October 2024, Monster Beverage launched Monster Ultra Vice Guava nationally to strong retailer and consumer reception. Building on this momentum, several new products debuted in January 2025, including Monster Energy Ultra Blue Hawaiian, Juice Viking Berry, Brew Triple Shot, Reign Storm Tropical, Reign White Haze and Bang Energy Sour Ropes.

Here’s How Estimates Stack Up for MNST

Reflecting the positive sentiment around Monster Beverage, the Zacks Consensus Estimate for earnings per share (EPS) projects solid growth in the coming years. For fiscal 2025, EPS is expected to rise by 13% year over year, followed by an additional 11.6% increase in 2026.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Challenges Impacting Monster Beverage Stock

Despite its strong performance in core energy drinks and product innovation, Monster Beverage faced notable headwinds in fourth-quarter 2024, primarily stemming from its Alcohol Brands segment. Sales in this division declined due to weaker craft beer demand, which contributed to higher inventory reserves and dampened the overall improvement in gross profit.

Moreover, operating expenses rose year over year, impacted by impairment charges related to the underperformance of the Alcohol Brands business. These charges reflected both operational and financial results falling short of expectations, as well as a reduction in projected future performance, largely due to persistent category challenges.

In addition to impairment costs, Monster experienced rising payroll expenses, increased sponsorship and endorsement spending and elevated legal expenses, all contributing to the company's growing cost burden. As a result, operating expenses as a percentage of sales increased, with selling expenses also trending higher.

Investment Opinion on MNST Stock

Monster Beverage remains a compelling investment that is positioned for potential upside, supported by its strong brand portfolio, innovation and long-term growth strategies. Despite the stock trading at a premium, the company's fundamentals remain solid, reflecting resilience in a competitive market. While margins have already improved, ongoing strategic initiatives and product expansion efforts provide a positive outlook.

However, investors should remain cautious about near-term risks, including challenges in its Alcohol Brands segment. Given these factors, long-term investors may consider holding MNST shares. Currently, MNST carries a Zacks Rank #3 (Hold).

Three Stocks Looking Good

Primo Brands Corporation PRMB is a branded beverage company with a focus on healthy hydration, delivering sustainably and domestically sourced diversified offerings across products, formats, channels, price points and consumer occasions, distributed primarily in every state and Canada. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Primo Brands’ current financial-year sales and EPS indicates growth of 146.9% and 54.5%, respectively, from the prior-year levels. PRMB has a trailing four-quarter earnings surprise of 7.2%, on average.

Molson Coors Beverage Company (TAP), a global manufacturer and seller of beer and other beverage products, has an impressive diverse portfolio of owned and partner brands. TAP currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Molson Coors’ current financial-year sales and EPS indicates growth of 0.1% and 6.9%, respectively, from the prior-year levels. The company has a trailing four-quarter earnings surprise of 18.1%, on average.

United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. It currently carries a Zacks Rank of 2. UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average.

The consensus estimate for United Natural Foods’ current financial-year sales and earnings implies growth of 1.9% and 485.7%, respectively, from the year-ago figures.

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This article originally published on Zacks Investment Research (zacks.com).

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