Monster Beverage CorporationMNSTNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $64.04 per share(market-calibrated)

-19.0%

Upside to Fair Value

Current

$79.10

Pure Model

$62.18

Fair Value

$64.04

Bull Case

$77.93

Bear Case

$49.64

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

3.78%

Calibrated Growth

2.82%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $62.18.

What's Driving This Ratingfor MNST

✓

CapEx already efficient

CapEx at 2.27% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 27.97% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

↑

Strong near-term revenue growth

Analyst consensus projects 10.97% revenue growth in Year 1, fading to 7.47% by Year 5 and 2.50% by Year 10. Revenue reaches $15.2B by Year 10 (vs $8.3B today).

🎯

Market pricing in higher long-term growth

To justify $79.10, the market implies 3.78% perpetual growth — 128bps above the model's 2.50%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 66.77% indicates efficient cash generation. FCF reaches $2.9B by Year 10 (19.09% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.44

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.47%

Cost of Debt

Pre-tax Cost of Debt5.00%

Tax Rate23.25%

After-tax Cost of Debt3.84%

Equity Weight (E/V)100.00%

Debt Weight (D/V)0.00%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (100.00% × 6.47%) + (0.00% × 3.84%)

= 6.47%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$9.2B	$10.9B	$12.2B	$13.7B	$15.2B
EBIT	$2.6B	$3.0B	$3.4B	$3.8B	$4.3B
Tax	$598M	$707M	$794M	$892M	$989M
NOPAT	$2.0B	$2.3B	$2.6B	$2.9B	$3.3B
+ Depreciation	$58M	$68M	$77M	$86M	$96M
- Capex	$209M	$247M	$278M	$312M	$346M
- Δ NWC	$271M	$257M	$253M	$213M	$111M
Free Cash Flow	$1.6B	$1.9B	$2.2B	$2.5B	$2.9B
Discount Factor	0.939	0.829	0.731	0.645	0.534
Present Value	$1.5B	$1.6B	$1.6B	$1.6B	$1.6B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.9B

Terminal Growth Rate2.50%

WACC6.47%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$75.0B

PV of Terminal Value$40.1B

Exit Multiple Method

Year 10 EBITDA$4.3B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$87.0B

PV of Terminal Value$46.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$15.8B

PV of Terminal Value$40.1B

Enterprise Value$55.9B

(-) Net Debt-$2.1B

Equity Value$58.0B

Shares Outstanding984M

Price per Share$58.94

Exit Multiple Method

PV of Projected FCFs$15.8B

PV of Terminal Value$46.5B

Enterprise Value$62.3B

(-) Net Debt-$2.1B

Equity Value$64.3B

Shares Outstanding984M

Price per Share$65.43

Pure Model Fair Value

$62.18

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.47%	$81.16	$87.97	$97.13	$93.28	$89.62
5.47%	$67.19	$70.51	$74.96	$81.21	$89.62
6.47%	$57.92	$59.81	$62.18	$65.24	$69.32
7.47%	$51.10	$52.29	$53.71	$55.45	$57.63
8.47%	$45.77	$46.56	$47.48	$48.57	$49.88

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$49.64

-37.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.55

Base Case

$62.18

-21.4% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.44

Bull Case

$77.93

-1.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.37

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth10.97%

Year 3 Revenue Growth8.61%

Year 5 Revenue Growth7.47%

Year 7 Revenue Growth5.48%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin27.97%

Terminal EBIT Margin29.17%

Tax Rate23.25%

Historical Capex / Rev2.27%

NWC / Revenue29.83%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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