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A Look Into Monster Beverage's Price Over Earnings

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Benzinga Insights
·2 min read
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In the current session, Monster Beverage Inc. (NASDAQ: MNST) is trading at $81.96, after a 5.06% increase. Over the past month, the stock increased by 14.26%, and in the past year, by 31.86%. With performance like this, long-term shareholders optimistic but others are more likely to look into the price-to-earnings ratio to see if the stock might be overvalued.

Assuming that all other factors are held constant, this could present itself as an opportunity for shareholders trying to capitalize on the higher share price. The stock is currently above from its 52 week high by 4.02%.

The P/E ratio is used by long-term shareholders to assess the company’s market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E indicates that shareholders do not expect the stock to perform better in the future, and that the company is probably undervalued. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

View more earnings on MNST

Depending on the particular phase of a business cycle, some industries will perform better than others.

Monster Beverage Inc. has a better P/E ratio of 37.69 than the aggregate P/E ratio of 17.18 of the Beverages—Non-Alcoholic industry. Ideally, one might believe that Monster Beverage Inc. might perform better in the future than it’s industry group, but it’s probable that the stock is overvalued.

Price to earnings ratio is not always a great indicator of the company's performance. Depending on the earnings makeup of a company, investors may not be able to attain key insights from trailing earnings.

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