MNST

We rate Monster Beverage Corp (MNST) as a Buy with a composite score of 68.7/100 at a current price of $84.91. The stock scores above average across the majority of our six quantitative factors and ranks #134 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (97th percentile) and quality (80th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (57/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Monster Beverage Corp holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 68.7/100 places it at rank #134 in our full 7,333-stock universe. With a $65.7B market capitalization, Monster Beverage Corp operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 16% and momentum in the 71th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 43th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 55% (+12.8pp vs sector) narrow to operating margins of 29% (+27.9pp vs sector) and net margins of 22.7%, yielding a gross-to-net conversion rate of 41%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $84.91, Monster Beverage Corp is trading near fair value based on current fundamentals. Our value factor score of 66/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 44.8x (a 101% premium to the sector median of 22.3x), EV/EBITDA of 34.7x (at a premium), P/B of 10.6x, P/S of 10.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to Monster Beverage Corp. The company exhibits strong financial stability with a beta of 0.32, conservative leverage (24% D/E), and a stability factor in the 97th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.32 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 44.8x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 97th percentile and quality factor at the 80th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 55% provide a buffer against cost pressures; conservative leverage (24% D/E) limits balance sheet risk; above-average stability (97th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Monster Beverage Corp's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 23.6%, disciplined leverage (24% D/E), best-in-class net margins of 22.7%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Monster Beverage Corp meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 19.0% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Monster Beverage Corp receives a Buy rating with a composite score of 68.7/100 (rank #134 of 7,333). Our quantitative framework assigns a Narrow Moat (57/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 71/100.

Our analysis supports a constructive view on Monster Beverage Corp. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.