MNST 50.56 (+1.4%)
US61174X1090Beverages - Non-AlcoholicBeverages - Non-Alcoholic

Last update on 2024-06-07

Monster Beverage (MNST) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Discover the financial health of Monster Beverage (MNST) with a perfect Piotroski F-Score of 9/9 for 2023, indicating strong profitability, liquidity, and efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 9

We're running Monster Beverage (MNST) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score for Monster Beverage (MNST) is 9, indicating a strong financial position based on the scoring system's nine criteria. Here is a breakdown: 1) Profitability: MNST has a positive net income and cash flow, a growing return on assets, and its operating cash flow is higher than net income. 2) Liquidity: MNST has improved its current ratio, showing an ability to cover short-term liabilities, and it has low leverage. 3) Operating efficiency: MNST did not dilute shares, increased its gross margin, and improved its asset turnover ratio. In summary, MNST performed well in all areas according to the Piotroski criteria, showcasing strong profitability, liquidity, and efficiency.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 9, Monster Beverage (MNST) appears to be a strong and potentially undervalued investment. The company shows strong financial health, robust cash flow, effective asset use, and good liquidity. It would be worth considering this stock for a diversified investment portfolio due to its consistently positive performance across several key financial metrics.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Monster Beverage (MNST)

Company has a positive net income?

Net income represents the company's total earnings, minus all expenses and taxes. It is a crucial indicator of profitability.

Historical Net Income of Monster Beverage (MNST)

Monster Beverage (MNST) reported a net income of $1,630,988,000 in 2023, which is notably positive. Over the past 20 years, MNST has consistently managed to increase its net income, reflecting robust financial health and profitability. This trend showcases the company's resilience and effective cost management strategies, awarding MNST 1 point in the Piotroski Score for profitability.

Company has a positive cash flow?

Cash Flow from Operations (CFO) represents the amount of cash a company generates from its regular business operations. A positive CFO indicates a company's ability to generate sufficient cash to maintain and grow its operations.

Historical Operating Cash Flow of Monster Beverage (MNST)

For 2023, Monster Beverage (MNST) reported CFO of $1,717,753,000. This positive figure highlights the company's robust capability to generate cash from its core operations. This is a significant improvement compared to previous years; for instance, the CFO in 2022 was $887,699,000. Over the last 20 years, the Cash Flow has shown substantial growth, moving from a mere $5,484,414 in 2003 to the current value, indicative of effective business expansion and operational efficiency. The upward trend in CFO is a positive signal for investors, suggesting the company's solid financial health and operational efficacy, thus adding 1 point in the Piotroski F-Score.

Return on Assets (ROA) are growing?

Compare the ROA of 0.1814 in 2023 with the ROA of 0.148 in 2022. If the ROA increased in 2023 add 1 point if not set it to 0.

Historical change in Return on Assets (ROA) of Monster Beverage (MNST)

In 2023, Monster Beverage (MNST) demonstrated a Return on Assets (ROA) of 0.1814, compared to a lower ROA of 0.148 in 2022. This increase is a positive indicator, contributing 1 point to the Piotroski Score. The nearly 23% improvement indicates better utilization of assets in generating profits, which is crucial for assessing operating efficiency and company health. **Historical perspective**: When tracking operating cash flows over the past 20 years, MNST generally shows upward trends, presumably driving this ROA boost. **Industry comparison**: Despite this rise, it lags behind the sector's median ROA of 0.4804 in 2023, indicating more room for improvement in asset efficiency.

Operating Cashflow are higher than Netincome?

This criterion compares the operating cash flow to the net income over a specified period.

Historical accruals of Monster Beverage (MNST)

With an operating cash flow of $1.718 billion compared to a net income of $1.631 billion in 2023, Monster Beverage (MNST) illustrates a positive indicator in its financial analysis. Having the operating cash flow higher than net income (by $87.6 million) adds 1 point to our Piotroski score. This positive trend has been a consistent pattern for the company over the last 20 years. From the data, the operating cash flow has generally outpaced net income. This trend underscores a robust and healthy operational efficiency of Monster Beverage in reliably converting its income into cash, thereby supporting better business stability and liquidity. Additionally, the average advisor and investor should observe the accrual values, where MNST demonstrates a low level of accruals (0.1773), further highlighting strong cash liquidity and lower risk of potential earnings manipulation.

Liquidity of Monster Beverage (MNST)

Leverage is declining?

Leverage indicates the company's reliance on debt financing over equity. It is crucial as high leverage increases financial risk.

Historical leverage of Monster Beverage (MNST)

For Monster Beverage (MNST) from 2022 to 2023, the leverage has remained at 0. Z-score for this criterion would be 0 since leverage did not decrease. Historically, the leverage trend shows no significant reliance on debt, maintaining a virtually debt-free stance. This consistent zero leverage illustrates strong financial stability and prudent capital management on MNST's part. Displaying data over the last 20 years, we observe a negligible leverage peaking only in 2003 at 0.0075, underscoring sustained control over debt usage.

Current Ratio is growing?

Current Ratio assesses a company's ability to pay off its short-term liabilities with its short-term assets. An increasing Current Ratio typically indicates improvements in liquidity.

Historical Current Ratio of Monster Beverage (MNST)

Comparing the Current Ratio, it has increased from 4.7555 in 2022 to 4.8111 in 2023. This increase, although slight, denotes better liquidity, adding 1 point based on the Piotroski criterion. Historically, Monster Beverage has maintained a Current Ratio significantly higher than the industry median, underscoring its strong liquidity position. The median Current Ratio for the industry in 2023 is 1.417 versus Monster's 4.8111, highlighting Monster’s robust ability to cover its short-term obligations. The trend over the last 20 years shows Monster frequently outperforming the industry, indicating sustained operational efficiency.

Number of shares not diluted?

Change in Shares Outstanding represents the trend in share issuance or buybacks.

Historical outstanding shares of Monster Beverage (MNST)

The Outstanding Shares decreased from 1,053,558,000 in 2022 to 1,044,887,000 in 2023, resulting in a reduction of 8,671,000 shares. This reflects a positive trend as it indicates the company is engaging in share buybacks, which can be beneficial for shareholders by increasing the ownership percentage of existing shareholders and potentially boosting earnings per share (EPS). Looking over the last 20 years, Monster Beverage (MNST) has shown a general trend of increasing share count particularly notable with a larger increase in 2019, which could reflect more aggressive expansion strategies during those periods. Nevertheless, the recent decrease earns MNST a score of 1 for this Piotroski criterion.

Operating of Monster Beverage (MNST)

Cross Margin is growing?

Indicates the change in profitability from one period to another, showing the company's ability to manage cost of goods sold.

Historical gross margin of Monster Beverage (MNST)

Monster Beverage (MNST) experienced an increase in Gross Margin from 0.503 in 2022 to 0.5314 in 2023. This upward trend is a positive indicator, reflecting better cost management and potentially higher pricing power. The recent 2023 gross margin of 0.5314 indicates enhanced profitability as compared to 2021 where it was 0.561. When evaluating the historical trends, MNST's gross margin has generally been above the industry median, which in 2023 was 0.4804, reaffirming its superior cost efficiency. From 2003 to 2023, MNST maintained gross margins mostly above the industry benchmark, showcasing its competitive strength in cost management. The previous dips especially in 2022, were likely transient. Hence, this criterion earns a 1 point for MNST.

Asset Turnover Ratio is growing?

The change in Asset Turnover evaluates how efficiently Monster Beverage is utilizing its assets to generate revenue by comparing its 2023 ratio with the previous year.

Historical asset turnover ratio of Monster Beverage (MNST)

In 2023, Monster Beverage recorded an Asset Turnover ratio of 0.7942 compared to 0.7841 in 2022. This slight increase suggests an improvement in efficiency, meaning that the company has managed to generate more revenue per dollar of assets over the past year. Historically, the company had higher Asset Turnover ratios, notably above 2.0 including the peak in 2005 at 2.8375. However, there has been a clear decline since then, stabilizing just below 0.8 in recent years before the uptick in 2023. The increase in 2023 indicates some potential recovery, earning a point under the Piotroski score criteria, which is good news since it might reflect better resource utilization or enhanced sales efficiency.


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