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Monster Beverage Corp

Monster Beverage Corp. Founded in 1985 Previously known as Hansen Natural Corp Changed its name to Monster Beverage Corporation in Jan 2012 Headquartered in Corona, CA Takes up 1.4% of the market Gained volume in 2012 Competitors lost volume. Monster Beverage Corp. Brands include:

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Monster Beverage Corp

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  1. Monster Beverage Corp • Founded in 1985 • Previously known as Hansen Natural Corp • Changed its name to Monster Beverage Corporation in Jan 2012 • Headquartered in Corona, CA • Takes up 1.4% of the market • Gained volume in 2012 • Competitors lost volume

  2. Monster Beverage Corp • Brands include: • Monster Energy • Hansen’s • Peace Tea • Worx Energy • Blue Sky

  3. Comparable Companies • Top 3 Competitors control 88% of the market • The Coca-Cola Company • Dr. Pepper Snapple • PepsiCo • Monster Beverage

  4. Value of Equity Estimation • VEnt-VD=VEq • NFL (=VD) of $2,019,488 • $3,691,635 - $2,019,488 = $1,672,147 • VEq= $1,672,147

  5. Equity Valuation using Dividend Discount Model • (80+55)/2=67.5

  6. Using Analysts’ Forecasts ((3.1-2.4)/2.4)(1/3)-1= 8.91%

  7. Equity Valuation using Residual Income Model

  8. Mid Year Adjustment • Because derivations assume payoffs occur at year-end… • Some analysts adjust to mid-year to approximate payoffs occurring evenly throughout the year • For Monster • (1+rEnt).5 * $3,691,635 = $3,910,520

  9. Sensitivity Analysis • Market Value of Monster (Mod 3): $11.5B ($11,213 + $300 [NFL]) • According to this, sell in any scenario

  10. Takeaways & Concerns • VEq= $1,672,147 • According to sensitivity analysis • Sell in all scenarios • Most likely will adjust my EPM to make earnings forecast higher • Hopefully will alleviate the situation

  11. Questions?

  12. Sources Cited • Photos from Google images • Yahoo Finance: MNST • http://www.beverage-digest.com/pdf/top-10_2013.pdf

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