Energy drink company Monster Beverage (NASDAQ: MNST) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 4.7% year on year to $1.81 billion. Its non-GAAP profit of $0.38 per share was 5.5% below analysts’ consensus estimates.

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Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, said, “We recorded strong operating results on an adjusted basis in the 2024 fourth quarter and for the 2024 full year.

Company Overview

Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ: MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.

Beverages, Alcohol, and Tobacco

These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $7.49 billion in revenue over the past 12 months, Monster is one of the larger consumer staples companies and benefits from a well-known brand that influences consumer purchasing decisions.

As you can see below, Monster grew its sales at a decent 10.6% compounded annual growth rate over the last three years. This shows there was demand for its offerings, a useful starting point for our analysis.

This quarter, Monster grew its revenue by 4.7% year on year, and its $1.81 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 6.6% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is above average for the sector and implies the market is forecasting some success for its newer products.

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Cash Is King

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Monster has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 21.8% over the last two years.

Key Takeaways from Monster’s Q4 Results

We struggled to find many positives in these results as its revenue was in line while its EPS missed. Overall, this was a softer quarter, but the stock traded up 2.8% to $53.35 immediately following the results.

So should you invest in Monster right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.