Despite macroeconomic concerns, beverage demand is expected to remain stable, driven by consumer preferences and the industry’s ability to adapt and introduce new products.
Given the industry’s bright prospects, fundamentally sound beverage stocks Monster Beverage Corporation (MNST), Coca-Cola Europacific Partners PLC (CCEP), and Carlsberg A/S (CABGY) are worth adding to your watchlists.
Before discussing the fundamentals of these stocks in detail, let’s see what’s driving the prospects beverage industry.
According to Statista, beverage revenue is expected to increase at a CAGR of 11.1% to reach $448.60 billion by 2028. Revenue this year is projected to reach $294.50 billion.
In 2024, the global non-alcoholic beverages market is expected to attain a value of $987.30 billion, and it is poised for significant expansion, reaching a projected value of $1.89 trillion by 2034, exhibiting a CAGR of 6.7% during the forecast period.
In addition, the functional beverages market is expected to grow at an 8.6% CAGR to $339.60 billion by 2030. The growing demand for functional beverages is driven by health-conscious consumers seeking healthier options with added benefits like improved energy, immunity, and digestion, resulting in market growth.
Considering these conducive trends, let’s take a look at the fundamentals of the three above-mentioned Beverages stocks, starting with the third pick.
Stock #3: Monster Beverage Corporation (MNST)
MNST through its subsidiaries, engages in development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments: Finished Product, Concentrate, and Other.
MNST’s forward non-GAAP PEG of 2.05x is 17.9% lower than the industry average of 2.50x.
MNST’s trailing-12-month net income margin of 22.62% is 361.9% higher than the industry average of 4.90%. Its trailing-12-month EBIT margin of 27.86% is 230.6% higher than the industry average of 8.43%.
For the fiscal third quarter ended September 30, 2023, MNST net sales stood at $1.86 billion, up 14.3% year-over-year. Its gross profit rose 18% from the previous-year quarter to $983.76 million. The company’s net income stood at $452.69 million and $0.43 per share, up 40.4% and 43.3% year-over-year, respectively.
The consensus revenue estimate of $8.01 billion for the year ending December 2024 represents a 11.8% increase year-over-year. Its EPS is expected to grow at 16.7% year-over-year to $1.83 for the same period. MNST’s shares have gained 16% over the past three months to close the last trading session at $57.96.
MNST’s POWR Ratings reflect this optimistic outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MNST also has a B grade for Stability and Quality. It is ranked #17 out of 32 stocks in the B-rated Beverages industry. Click here for the additional POWR Ratings for Growth, Value, Sentiment and Momentum for MNST.
Stock #2: Coca-Cola Europacific Partners PLC (CCEP)
Based in Uxbridge, the United Kingdom, CCEP together with its subsidiaries, produces, distributes, and sells a range of non-alcoholic ready to drink beverages. It offers flavours, mixers, and energy drinks; soft drinks, waters, enhanced water, and isotonic drinks; and ready-to-drink tea and coffee, juices, and other drinks.
CCEP’s forward non-GAAP P/E of 16.36x is 9.2% lower than the industry average of 18.01x. Its forward non-GAAP PEG of 2.11x is 15.7% lower than the industry average of 2.50x.
CCEP’s trailing-12-month levered FCF margin of 8.24% is 69.6% higher than the industry average of 4.86%. Its trailing-12-month ROCE of 22.08% is 95.4% higher than the industry average of 11.30%.
CCEP’s revenue for the six-month that ended June 30, 2023, came in at €8.98 billion ($9.81 billion), up 8.4% year-over-year. Its profit after taxes and EPS came in at €854 million ($933.66 million) and €1.86, increased 26.5% and 27.4% year-over-year, respectively. Also, its operating income grew 21% year-over-year to €1.17 billion ($1.28 billion).
Analysts expect CCEP’s revenue to increase 8.9% year-over-year to $21.94 billion for the year ending December 2024. Its EPS is expected to grow 8.6% year-over-year to $4.37 for the same period. The stock has gained 16% over the past year to close the last trading session at $65.92.
CCEP has a B grade for Stability and Sentiment. It is ranked #14 in the same industry.
Beyond what is stated above, we’ve also rated CCEP for Growth, Value, Momentum and Quality. Get all CCEP ratings here.
Stock #1: Carlsberg A/S (CABGY)
Headquartered in Copenhagen, Denmark, CABGY produces, markets, and sells beer and other products globally. The company provides core and craft & specialty beers and alcohol-free brews. It mainly offers products under the Carlsberg, Chongqing, Tuborg, Feldschlösschen, 1664 Blanc, Baltika, Chongqing, Ringnes, and Somersby brand names.
CABGY’s forward non-GAAP P/E of 3.73x is 79.3% lower than the industry average of 18.01x. Its forward EV/EBIT of 13.78x is 7.2% lower than the industry average of 14.85x.
CABGY’s trailing-12-month net income margin of 10.62% is 116.8% higher than the 4.90% industry average. Its trailing-12-month levered FCF margin of 11.05% is 127.5% higher than the 4.86% industry average.
According to the trading statement for the third quarter ended September 30, 2023, CABGY’s total revenue grew marginally year-over-year to DKK 20.29 billion ($2.97 billion). Its reported revenue growth from the Western Europe and Central & Eastern Europe regions were 5.4% and 5.2% year-over-year, respectively.
Further, the company maintained its earnings guidance for the fiscal year 2023. CABGY expects organic growth in operating profit to be between 4% to 7%.
Street expects CABGY’s revenue to increase 4% year-over-year to $11.22 billion for the fiscal year ending December 2024. Its EPS is expected to grow 7.9% year-over-year to $7.26 for the same period. Shares of CABGY have gained 4.7% over the past month to close the last trading session at $25.12.
CABGY’s is ranked #13 in the same industry. It has a B grade for Stability and Quality. To see additional CABGY’s ratings for Growth, Value, Momentum and Sentiment, click here.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
MNST shares were trading at $58.53 per share on Tuesday afternoon, up $0.57 (+0.98%). Year-to-date, MNST has gained 1.60%, versus a -0.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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