Monster Beverage Stock Has Risen 44.7%, Outperforming Its Peers
Monster Beverage Stays at the Top of the Beverage Giants
Stock price movement
As of December 8, 2015, Monster Beverage’s (MNST) stock price has risen by 44.7% to $156.50 since the beginning of the year. It has outperformed its nonalcoholic beverage peers.
The stock price of Dr Pepper Snapple (DPS) touched an all-time high, closing at $92.56 on December 8. It has risen by 29.3% since the start of 2015. Coca-Cola (KO) and PepsiCo (PEP) have risen by 2.1% and 6.1%, respectively, as of December 8.
Monster has also outperformed the Consumer Staples Select Sector SPDR ETF (XLP) and the S&P 500 Index, which have risen by 4.3% and 0.3%, respectively, since the start of the year.
What’s driving the rise in stock prices
After facing a tough second quarter that involved the transfer of distribution rights to Coca-Cola, Monster Beverage bounced back in 3Q15 with a double-digit growth in sales. The strong demand for energy drinks and Monster Beverage’s strategic deal with Coca-Cola are key long-term growth drivers.
Dr Pepper Snapple exceeded analysts’ sales and earnings estimates in each of the first three quarters of fiscal 2015. As we saw in Part 1 of this series, the company’s sales growth surpassed Coca-Cola and PepsiCo in the first three quarters of fiscal 2015.
In fiscal 3Q15, Dr Pepper Snapple posted a sales growth of 3% and a growth in adjusted EPS (earnings per share) of 10.2%. It has raised its outlook for fiscal 2015 twice this year. The company’s increased productivity, higher pricing, aggressive promotional activities, and innovation are all working in its favor.
On the other hand, the fiscal 3Q15 results for Coca-Cola and Dr Pepper Snapple continued to be shadowed by adverse currency fluctuations. Coca-Cola’s 3Q15 sales declined by 4.6%, and adjusted EPS fell 3.8%. PepsiCo’s 3Q15 sales declined by 5.2%, and adjusted EPS fell by 0.7%.
ETF exposure
XLP has a 21.2% exposure to beverages and a 1.5% exposure to Monster Beverage. Monster Beverage is also part of other consumer staples ETFs such as the First Trust Consumer Staples AlphaDEX ETF (FXG), the iShares Global Consumer Staples ETF (KXI), and the Vanguard Consumer Staples ETF (VDC). Dr Pepper Snapple makes up 2.1%, 0.7%, and 1.2% of FXG, KXI, and VDC, respectively.
In the next part of this series, we’ll compare the valuation multiples of the nonalcoholic beverage companies.
Browse this series on Market Realist:
