Monster Beverage Stock Vs. Keurig Dr Pepper

Core Viewpoint - Monster Beverage is positioned as a superior investment compared to Keurig Dr Pepper, supported by its higher revenue growth, profitability, and financial stability [1] Group 1: Stock Performance - Keurig Dr Pepper stock has increased by 35% from $30 in January 2021 to around $40, while Monster Beverage stock has only risen by about 10% from $45 to $50 during the same period [2] - KDP stock returns were inconsistent, with 17% in 2021, -1% in 2022, and -4% in 2023, while MNST stock returns were 4%, 6%, and 13% respectively [2] Group 2: Revenue Growth - Keurig Dr Pepper's sales grew at an average annual rate of 8.5%, from $11.6 billion in 2020 to $14.8 billion in 2023, while Monster Beverage's sales grew at an average rate of 15.8%, from $4.6 billion to $7.1 billion [4] - Monster Beverage's revenue growth is attributed to strong demand for energy drinks, new product launches, and international market expansion [6] Group 3: Profitability - Keurig Dr Pepper's operating margin was 21.6% in 2023, slightly down from 21.9% in 2020, while Monster Beverage's operating margin decreased from 35.5% to 27.4% during the same period [7] - In the last twelve months, Monster Beverage's operating margin of 27.3% is better than Keurig Dr Pepper's 23% [7] Group 4: Financial Risk - Monster Beverage has a debt-to-equity ratio of 1%, significantly lower than Keurig Dr Pepper's 32% [8] - Monster Beverage also has 19% cash as a percentage of assets, compared to only 1% for Keurig Dr Pepper, indicating a stronger financial position [8] Group 5: Valuation and Future Prospects - Monster Beverage trades at 7x revenues, while Keurig Dr Pepper trades at 3.3x trailing revenues, reflecting a higher valuation multiple for Monster Beverage [9] - The demand for energy drinks is expected to continue growing, supported by Monster Beverage's recent pricing actions and cost-cutting focus [9]