Monster Beverage Corporation (MNST Quick QuoteMNST - Free Report) has been showing impressive upward momentum, trading above its 200- and 50-day simple moving averages (SMAs), which are the key indicators of price stability and long-term bullish trends. As of Friday, MNST was trading at $57.31, surpassing its 200-day SMA of $51.23 and 50-day SMA of $51.41, highlighting a continued uptrend.

MNST Trades Above 200 & 50-Day SMAs

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SMA is a key tool in technical analysis used to assess price trends by smoothing out short-term fluctuations, offering a clearer view of the stock's longer-term direction. This technical strength, with the stock's sustained momentum, reflects positive market sentiment and investor confidence in MNST’s financial health and growth prospects.

MNST has seen a remarkable 11.9% rise in the past six months, outpacing the industry's decline of 5.9%. The company’s success is driven by its strong positioning in the expanding energy drinks category, bolstered by strategic product launches. This execution has also allowed MNST to outpace the S&P 500 and the broader sector, which have fallen 0.7% and 4%, respectively, in the same period.

MNST Stock's Past Six Months' Peformance

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Evaluating Monster Beverage’s Stock Momentum

Monster Beverage continues demonstrating strength in its energy drinks category, fueling its overall performance. In the fourth quarter of 2024, the Monster Energy Drinks segment reported a 4.5% year-over-year increase in net sales, with currency-adjusted growth reaching 7.6%. This solid performance reflects the company’s strong brand positioning, ongoing product innovation and the expanding demand for energy drinks.

Monster Beverage is delivering strong margin growth, driven by lower input costs, despite some offset from an unfavorable geographical sales mix. Gross margin improved year over year, reflecting enhanced cost efficiencies and operational improvements. Sequentially, margins also strengthened compared to the prior quarter, highlighting ongoing progress. The reduction in input costs has been a key factor in boosting profitability, helping Monster sustain solid financial performance despite regional sales variations.

Monster Beverage has been benefiting from the expansion of the energy drinks category and successful product launches. Despite challenges from hurricanes, wildfires and other weather-related disruptions, the company maintained strong growth across key retail channels, showcasing its operational resilience.

Sales saw record highs, driven by momentum in international markets, with notable growth in regions across Europe, Asia-Pacific and Latin America. Revenues from customers outside the United States increased, making up a larger share of total sales. Monster also gained market share in several key regions, reinforcing its strong global presence. Additionally, the company is exploring opportunities for its alcohol products in international markets, further expanding its portfolio beyond energy drinks.

Challenges Impacting Monster Beverage Stock

Despite all the positives, Monster Beverage’s fourth-quarter results were affected by challenges in its Alcohol Brands segment, which saw a decline in sales due to weaker craft beer demand. While gross profit improved, it was impacted by higher inventory reserves resulting from excess stock in the segment.

In addition, operating expenses increased due to impairment charges linked to the underperformance of the Alcohol Brands business. These charges stemmed primarily from operating and financial performance falling short of projections, driven by category challenges and a decline in expected ongoing performance.

Monster Beverage has been facing rising costs, with adjusted operating expenses increasing year over year due to higher impairment charges in the Alcohol Brands segment, increased payroll expenses and elevated sponsorship and endorsement costs. Legal expenses also contributed to the overall cost burden. As a percentage of sales, operating expenses expanded, with selling expenses also rising. These factors may continue to put pressure on the company’s overall profitability moving forward.

Final Thoughts on MNST Stock

Monster Beverage is positioned for potential upside, supported by its strong brand portfolio, innovation and long-term growth strategies. Despite recent stock fluctuations, the company's fundamentals remain solid, reflecting resilience in a competitive market. While margins have already improved, ongoing strategic initiatives and product expansion efforts provide a positive outlook. However, investors should remain cautious about near-term risks, including challenges in its Alcohol Brands segment. Given these factors, long-term investors may consider holding MNST shares. Currently, MNST carries a Zacks Rank #3 (Hold).

Three Stocks Looking Good

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The Zacks Consensus Estimate for Molson Coors’ current financial-year sales and EPS indicates growth of 0.3% and 6.5%, respectively, from the prior-year levels. The company has a trailing four-quarter earnings surprise of 18.1%, on average.

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The Zacks Consensus Estimate for Primo Brands’ current financial-year sales and EPS indicates growth of 147.2% and 54.5%, respectively, from the prior-year levels. PRMB has a trailing four-quarter earnings surprise of 7.2%, on average.

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The consensus estimate for United Natural Foods’ current financial-year sales and earnings implies growth of 1.9% and 485.7%, respectively, from the year-ago figures.