Stock Analysis on Net
Stock Analysis on Net

Monster Beverage Corp. (NASDAQ:MNST)

This company has been moved to the archive! The financial data has not been updated since May 7, 2024.

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Monster Beverage Corp., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 11.80%
01 FCFF0 1,485,835
1 FCFF1 1,817,462 = 1,485,835 × (1 + 22.32%) 1,625,597
2 FCFF2 2,162,408 = 1,817,462 × (1 + 18.98%) 1,729,946
3 FCFF3 2,500,604 = 2,162,408 × (1 + 15.64%) 1,789,317
4 FCFF4 2,808,180 = 2,500,604 × (1 + 12.30%) 1,797,276
5 FCFF5 3,059,803 = 2,808,180 × (1 + 8.96%) 1,751,583
5 Terminal value (TV5) 117,293,955 = 3,059,803 × (1 + 8.96%) ÷ (11.80% – 8.96%) 67,144,897
Intrinsic value of Monster Beverage Corp. capital 75,838,617
Less: Finance lease liabilities (fair value) 6,468
Intrinsic value of Monster Beverage Corp. common stock 75,832,149
 
Intrinsic value of Monster Beverage Corp. common stock (per share) $72.79
Current share price $54.67

Based on: 10-K (reporting date: 2023-12-31).

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Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Monster Beverage Corp., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 56,951,282 1.00 11.80%
Finance lease liabilities (fair value) 6,468 0.00 4.87% = 6.30% × (1 – 22.66%)

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 1,041,728,228 × $54.67
= $56,951,282,224.76

   Finance lease liabilities (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (21.15% + 24.20% + 23.53% + 13.32% + 21.76%) ÷ 5
= 22.66%

WACC = 11.80%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Monster Beverage Corp., PRAT model

Microsoft Excel
Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Interest on finance lease liabilities 255 24 19 39 56
Net income 1,630,988 1,191,624 1,377,475 1,409,594 1,107,835
 
Effective income tax rate (EITR)1 21.15% 24.20% 23.53% 13.32% 21.76%
 
Interest on finance lease liabilities, after tax2 201 18 15 34 44
Interest expense (after tax) and dividends 201 18 15 34 44
 
EBIT(1 – EITR)3 1,631,189 1,191,642 1,377,490 1,409,628 1,107,879
 
Current finance lease liabilities 6,449 757 960 799 1,485
Noncurrent finance lease liabilities 19 41 41 24 —
Stockholders’ equity 8,228,744 7,025,041 6,566,951 5,160,860 4,171,281
Total capital 8,235,212 7,025,839 6,567,952 5,161,683 4,172,766
Financial Ratios
Retention rate (RR)4 1.00 1.00 1.00 1.00 1.00
Return on invested capital (ROIC)5 19.81% 16.96% 20.97% 27.31% 26.55%
Averages
RR 1.00
ROIC 22.32%
 
FCFF growth rate (g)6 22.32%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 See details »

2023 Calculations

2 Interest on finance lease liabilities, after tax = Interest on finance lease liabilities × (1 – EITR)
= 255 × (1 – 21.15%)
= 201

3 EBIT(1 – EITR) = Net income + Interest on finance lease liabilities, after tax
= 1,630,988 + 201
= 1,631,189

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [1,631,189 – 201] ÷ 1,631,189
= 1.00

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 1,631,189 ÷ 8,235,212
= 19.81%

6 g = RR × ROIC
= 1.00 × 22.32%
= 22.32%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (56,957,750 × 11.80% – 1,485,835) ÷ (56,957,750 + 1,485,835)
= 8.96%

where:

Total capital, fair value0 = current fair value of Monster Beverage Corp. debt and equity (US$ in thousands)
FCFF0 = the last year Monster Beverage Corp. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Monster Beverage Corp. capital

FCFF growth rate (g) forecast

Monster Beverage Corp., H-model

Microsoft Excel
Year Value gt
1 g1 22.32%
2 g2 18.98%
3 g3 15.64%
4 g4 12.30%
5 and thereafter g5 8.96%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 22.32% + (8.96% – 22.32%) × (2 – 1) ÷ (5 – 1)
= 18.98%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 22.32% + (8.96% – 22.32%) × (3 – 1) ÷ (5 – 1)
= 15.64%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 22.32% + (8.96% – 22.32%) × (4 – 1) ÷ (5 – 1)
= 12.30%