Monster Beverage: Navigating Volatility with Strategic Partnerships and Resilient EPS Growth

Monster Beverage (MNST) has long been a powerhouse in the energy drink market, but its journey since 2021 has been marked by turbulence. Despite macroeconomic headwinds, currency fluctuations, and internal operational challenges, the company has sustained its earnings growth trajectory and expanded its global footprint through strategic partnerships. This article examines how MNST has leveraged alliances, innovation, and capital discipline to drive shareholder returns, even during periods of market underperformance.

The EPS Story: Growth Amid Fluctuations

Monster's EPS figures from 2021 to 2025 reveal a pattern of resilience. After a 13% drop in 2022, EPS rebounded by 32% in 2023 before dipping slightly in 2024. The trailing twelve-month (TTM) EPS for 2025 stands at $1.52, a 7.1% year-over-year increase. While this growth isn't flawless, it outpaces peers like Coca-Cola (KO) and PepsiCo (PEP), which reported average EPS growth of 3.4% and 5.9%, respectively, over five years.

The key driver of MNST's earnings stability is its global net sales growth, which rose 13.9% in 2022 and continues to expand in emerging markets. Even in 2024, when EPS dipped 3.8%, net sales in regions like Latin America surged 38.4% (currency-neutral). This underscores MNST's ability to offset domestic saturation with overseas expansion.

Strategic Partnerships: The Engine of International Growth

Monster's partnerships have been instrumental in unlocking new markets and mitigating risks:

1. Coca-Cola Alliance (2015–Present):
   MNST's decades-long partnership with Coca-Cola remains its crown jewel. Leveraging Coca-Cola's global distribution network, Monster has penetrated markets like the Philippines, where it transitioned to Coca-Cola's system in 2023. This collaboration also includes brand exchanges: Monster acquired Coca-Cola's energy drink portfolio (e.g., Relentless, NOS) while transferring non-energy brands to Coca-Cola. The result? A streamlined focus on its core energy drink business, which now accounts for 91% of sales.

2. Starbucks Co-Branding (2021–Present):
   MNST's alliance with Starbucks since 2015 has amplified its premium positioning. By 2025, co-developed products like nitro-infused energy drinks contributed to an 8.5% sales boost in key markets. Starbucks' 35,000+ global locations serve as both a sales channel and a credibility amplifier for Monster's premium image.

3. Regional Partnerships:
   In Mexico, a chili-infused energy drink drove 22% sales growth in 2023. In India, a joint venture with Dabur Beverages aims to capitalize on the country's growing energy drink market. These localized strategies have helped MNST achieve 18% international sales growth in 2023, with emerging markets now contributing 25% of total revenue.

Shareholder Returns: Buybacks, Splits, and a Strong Balance Sheet

Monster's capital allocation strategy has been a key differentiator for shareholders:

• Share Repurchases: MNST has returned $201.6 million to shareholders in buybacks, reducing diluted shares by 20% over nine years. As of 2025, $682.8 million remains under existing programs, signaling ongoing confidence in its stock's undervaluation.
• Stock Split (2023): The 2-for-1 split in March 2023 lowered the share price from $64 to ~$32, making it more accessible to retail investors and boosting liquidity.
• Cash Reserves: MNST's balance sheet is pristine, with $2 billion in cash and $1.5 billion in trailing twelve-month profits. This liquidity provides a buffer against risks and fuels opportunistic acquisitions (e.g., the CANarchy Craft Brewery acquisition in 2022).

Challenges and Risks

No growth story is without hurdles. MNST faces three critical challenges:

1. Alcohol Segment Struggles: The CANarchy acquisition, while strategically sound, has underperformed. In early 2025, sales in its Alcohol Brands segment dropped 38.1% year-over-year due to weak demand for the Beast product line. Management is addressing this by refining distribution and launching new flavors like Nasty Beast Hard Tea.

2. Currency Volatility: Emerging market growth is often diluted by foreign exchange headwinds. For example, 2022 currency effects reduced reported net sales by $81.9 million. MNST is mitigating this via local production and hedging strategies.

3. Energy Drink Saturation: The U.S. energy drink market is nearing maturity, with MNST's domestic sales growth slowing. To counter this, MNST is expanding into adjacent categories like water (Monster Tour Water) and wellness drinks (Reign Storm), which now contribute 9% of sales.

Investment Outlook: Hold with a Long-Term Lens

Monster Beverage's stock trades at a 6–8x forward price-to-sales ratio, below its historical average of 9–10x, reflecting investor concerns over near-term volatility. However, the company's fortress balance sheet, global expansion momentum, and disciplined capital returns make it a compelling long-term hold.

• Bull Case: If MNST can stabilize its alcohol segment, sustain 15%+ international sales growth, and leverage its partnerships to penetrate untapped markets (e.g., China), EPS could rise to $2.00 by 2026, justifying a 30% upside.
• Bear Case: A prolonged slowdown in emerging markets or a pricing war in the energy drink category could pressure margins. However, MNST's scale and brand dominance mitigate this risk.

Final Analysis

Monster Beverage's journey since 2021 mirrors the broader energy drink market: volatile yet resilient. While challenges like the alcohol segment's underperformance and currency headwinds are real, MNST's strategic partnerships, global reach, and shareholder-friendly policies position it to outperform over the long term. For investors willing to endure short-term turbulence, MNST offers a rare blend of growth potential and defensive financial strength.

Recommendation: Hold MNST for investors with a 3–5 year horizon, targeting a 12–15% annualized return. Avoid short-term trading due to earnings volatility.