By Rob Otman
Monster (Nasdaq: MNST) is a $30 billion company today. Investors that bought shares one year ago are sitting on a -0.3% total return. That’s below the S&P 500’s return of 16.83%.
Monster stock is underperforming the market. It’s beaten down, but it reports earnings on Tuesday. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Monster reported a recent EPS growth rate of 14.81%. That’s below the beverages industry average of 19.29%. That’s not a good sign. We like to see companies that have higher earnings growth.
✗ Price-to-Earnings (P/E): The average price-to-earnings ratio of the beverages industry is 38.44. And Monster’s ratio comes in at 38.58. Its valuation looks expensive compared to many of its competitors.
✓ Debt-to-Equity: The average price-to-earnings ratio of the beverages industry is 38.44. And Monster’s ratio comes in at 38.58. Its valuation looks expensive compared to many of its competitors.
✓ Free Cash Flow per Share Growth: Monster’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Monster comes in at 23.98% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Monster’s profit margin is above the beverages average of 13.4%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Monster is 17.06%, and that’s above its industry average ROE of 16.75%.
Monster stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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