After reading Monster Beverage Corporation's (NASDAQ:MNST) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Monster Beverage's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Did MNST beat its long-term earnings growth trend and its industry?
MNST's trailing twelve-month earnings (from 31 March 2019) of US$1.0b has jumped 21% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which MNST is growing has accelerated. What's enabled this growth? Let's see if it is merely attributable to industry tailwinds, or if Monster Beverage has seen some company-specific growth.
In terms of returns from investment, Monster Beverage has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 22% exceeds the US Beverage industry of 9.1%, indicating Monster Beverage has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Monster Beverage’s debt level, has increased over the past 3 years from 19% to 33%.
What does this mean?
Monster Beverage's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Monster Beverage to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MNST’s future growth? Take a look at our free research report of analyst consensus for MNST’s outlook.
- Financial Health: Are MNST’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
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