Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Monster Beverage Corp., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
An analysis of the profitability metrics from 2019 to 2023 reveals a general trend of margin compression that culminated in a trough in 2022, followed by a partial recovery in 2023. While the company maintained positive profitability across all indicators, there was a noticeable decline in efficiency and margin strength between 2020 and 2022.
- Profit Margin Trends
- The gross profit margin experienced a consistent decline from 59.95% in 2019 to 50.30% in 2022, before rebounding to 53.14% in 2023. Operating and net profit margins followed a similar trajectory, both peaking in 2020 at 35.51% and 30.65% respectively. These margins reached their lowest points in 2022, with operating profit margin falling to 25.11% and net profit margin to 18.88%. The subsequent increase in 2023 indicates a reversal of the downward trend.
- Asset and Equity Efficiency
- Return on Equity (ROE) and Return on Assets (ROA) mirrored the patterns observed in the profit margins. ROE peaked at 27.31% in 2020 and declined to a period low of 16.96% in 2022. Similarly, ROA decreased from a peak of 22.73% in 2020 to 14.37% in 2022. Both ratios showed signs of recovery in 2023, with ROE increasing to 19.82% and ROA rising to 16.84%, suggesting an improvement in the company's ability to generate earnings from its asset base and shareholder equity.
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Gross Profit Margin
Monster Beverage Corp., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 3,794,206) | 3,174,567) | 3,108,513) | 2,723,880) | 2,518,585) | |
| Net sales | 7,140,027) | 6,311,050) | 5,541,352) | 4,598,638) | 4,200,819) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 53.14% | 50.30% | 56.10% | 59.23% | 59.95% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 59.52% | 58.14% | 60.27% | — | — | |
| Mondelēz International Inc. | 38.22% | 35.92% | 39.19% | — | — | |
| PepsiCo Inc. | 54.21% | 53.03% | 53.35% | — | — | |
| Philip Morris International Inc. | 63.35% | 64.10% | 68.06% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 3,794,206 ÷ 7,140,027 = 53.14%
2 Click competitor name to see calculations.
Between 2019 and 2023, there was a consistent increase in both net sales and gross profit, indicating strong top-line growth. Net sales grew from 4,200,819 thousand US dollars in 2019 to 7,140,027 thousand US dollars in 2023. Similarly, gross profit rose from 2,518,585 thousand US dollars to 3,794,206 thousand US dollars over the same period. However, this expansion in absolute values was accompanied by a general contraction in the gross profit margin until 2022, followed by a partial recovery in 2023.
- Revenue and Profit Growth
- A steady upward trajectory is observed in total revenue and gross profit. Net sales increased by approximately 70% over the five-year period, while gross profit increased by approximately 50%. This indicates that while the company successfully expanded its market reach and sales volume, the cost of goods sold grew at a faster rate than revenue for a significant portion of the analysis period.
- Gross Profit Margin Compression
- The gross profit margin experienced a sustained decline from 2019 to 2022. The margin dropped from a peak of 59.95% in 2019 to 59.23% in 2020, 56.10% in 2021, and reached a period low of 50.30% in 2022. This downward trend suggests an increase in production costs, raw material expenses, or pricing pressures that outpaced the growth in net sales.
- Recent Margin Stabilization
- In 2023, the downward trend in profitability efficiency was reversed. The gross profit margin increased to 53.14%, representing a recovery of 284 basis points from the 2022 low. This shift suggests a potential successful implementation of cost-reduction strategies or an increase in average selling prices to mitigate the previous years of margin erosion.
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Operating Profit Margin
Monster Beverage Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | 1,953,355) | 1,584,721) | 1,797,467) | 1,633,153) | 1,402,939) | |
| Net sales | 7,140,027) | 6,311,050) | 5,541,352) | 4,598,638) | 4,200,819) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 27.36% | 25.11% | 32.44% | 35.51% | 33.40% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 24.72% | 25.37% | 26.67% | — | — | |
| Mondelēz International Inc. | 15.28% | 11.22% | 16.20% | — | — | |
| PepsiCo Inc. | 13.10% | 13.33% | 14.04% | — | — | |
| Philip Morris International Inc. | 32.85% | 38.56% | 41.32% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | 19.36% | 19.83% | 21.93% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Staples | 7.31% | 8.44% | 8.48% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 1,953,355 ÷ 7,140,027 = 27.36%
2 Click competitor name to see calculations.
Net sales exhibited consistent and strong growth from 2019 through 2023, increasing steadily from approximately 4.2 billion to 7.1 billion US dollars. While total operating income reached its highest level in 2023 at 1.95 billion US dollars, it did not follow the same linear trajectory as revenue, experiencing a notable contraction in 2022.
- Operating Profit Margin Volatility
- The operating profit margin peaked in 2020 at 35.51% before initiating a downward trend. A significant compression of margins occurred by 2022, where profitability dropped to a period low of 25.11%.
- Efficiency and Scaling
- Despite the continuous increase in net sales, the operating profit margin in 2023 of 27.36% remained below the levels recorded from 2019 to 2021. This divergence indicates that operating expenses grew at a faster rate than revenue during the middle of the analyzed period, reducing the overall efficiency of profit generation.
- Recent Performance Recovery
- A recovery phase is observed between 2022 and 2023, characterized by an increase in the operating profit margin by 2.25 percentage points. This improvement, coupled with the highest recorded operating income in 2023, suggests a successful effort to stabilize operating costs relative to sales growth.
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Net Profit Margin
Monster Beverage Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,630,988) | 1,191,624) | 1,377,475) | 1,409,594) | 1,107,835) | |
| Net sales | 7,140,027) | 6,311,050) | 5,541,352) | 4,598,638) | 4,200,819) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 22.84% | 18.88% | 24.86% | 30.65% | 26.37% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Coca-Cola Co. | 23.42% | 22.19% | 25.28% | — | — | |
| Mondelēz International Inc. | 13.77% | 8.63% | 14.97% | — | — | |
| PepsiCo Inc. | 9.92% | 10.31% | 9.59% | — | — | |
| Philip Morris International Inc. | 22.21% | 28.49% | 29.00% | — | — | |
| Net Profit Margin, Sector | ||||||
| Food, Beverage & Tobacco | 15.62% | 15.68% | 17.28% | — | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Staples | 5.47% | 6.11% | 6.21% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,630,988 ÷ 7,140,027 = 22.84%
2 Click competitor name to see calculations.
A review of the five-year financial performance indicates a consistent expansion in top-line revenue coupled with volatility in net profitability. While net sales exhibited an uninterrupted upward trajectory from 2019 through 2023, the net profit margin experienced a period of contraction followed by a partial recovery.
- Revenue Growth Trends
- Net sales grew steadily every year, increasing from US$ 4,200,819 thousand in 2019 to US$ 7,140,027 thousand in 2023. This consistent growth demonstrates a strong expansion in sales volume or pricing effectiveness over the analyzed period.
- Net Profit Margin Volatility
- The net profit margin peaked in 2020 at 30.65%, reflecting a period of high operational efficiency. However, a downward trend followed, with margins contracting to 24.86% in 2021 and reaching a five-year low of 18.88% in 2022. This decline occurred despite the concurrent increase in net sales, suggesting that operating expenses or other costs grew at a faster rate than revenue during this interval.
- Income Recovery and Stabilization
- A reversal of the downward margin trend is observed in 2023, where the net profit margin recovered to 22.84%. This recovery was driven by a significant increase in net income, which reached a period high of US$ 1,630,988 thousand. The 2023 results indicate an improved ability to convert sales into actual profit compared to the 2021-2022 period.
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Return on Equity (ROE)
Monster Beverage Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,630,988) | 1,191,624) | 1,377,475) | 1,409,594) | 1,107,835) | |
| Stockholders’ equity | 8,228,744) | 7,025,041) | 6,566,951) | 5,160,860) | 4,171,281) | |
| Profitability Ratio | ||||||
| ROE1 | 19.82% | 16.96% | 20.98% | 27.31% | 26.56% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Coca-Cola Co. | 41.30% | 39.59% | 42.48% | — | — | |
| Mondelēz International Inc. | 17.50% | 10.11% | 15.21% | — | — | |
| PepsiCo Inc. | 49.04% | 51.96% | 47.48% | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| ROE, Sector | ||||||
| Food, Beverage & Tobacco | 52.90% | 51.06% | 53.84% | — | — | |
| ROE, Industry | ||||||
| Consumer Staples | 30.71% | 32.10% | 31.40% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 1,630,988 ÷ 8,228,744 = 19.82%
2 Click competitor name to see calculations.
An analysis of the profitability trends reveals a divergence between net income growth and the expansion of the equity base over the five-year period from 2019 to 2023.
- Net Income Trends
- Net income exhibited volatility throughout the period, beginning at 1,107,835 thousand US$ in 2019 and reaching a peak of 1,630,988 thousand US$ in 2023. While a decline was observed between 2020 and 2022, the significant increase in the final year indicates a strong recovery in absolute profitability.
- Stockholders' Equity Growth
- A consistent and steady upward trajectory is observed in stockholders' equity, which grew from 4,171,281 thousand US$ in 2019 to 8,228,744 thousand US$ in 2023. This represents a near-doubling of the equity base over the five-year duration, reflecting continuous capital accumulation.
- Return on Equity (ROE) Interpretation
- The ROE reached its highest point in 2020 at 27.31% before experiencing a downward trend that culminated in a low of 16.96% in 2022. This compression in ROE is primarily driven by the fact that the growth in stockholders' equity outpaced the growth in net income for several consecutive years. A partial reversal of this trend occurred in 2023, with the ROE improving to 19.82% in alignment with the surge in net income.
In summary, although the company has increased its total net earnings, the rapid expansion of the equity base has led to a general moderation of the return on equity compared to the 2019 and 2020 levels.
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Return on Assets (ROA)
Monster Beverage Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,630,988) | 1,191,624) | 1,377,475) | 1,409,594) | 1,107,835) | |
| Total assets | 9,686,522) | 8,293,105) | 7,804,784) | 6,202,716) | 5,150,352) | |
| Profitability Ratio | ||||||
| ROA1 | 16.84% | 14.37% | 17.65% | 22.73% | 21.51% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Coca-Cola Co. | 10.97% | 10.29% | 10.36% | — | — | |
| Mondelēz International Inc. | 6.95% | 3.82% | 6.41% | — | — | |
| PepsiCo Inc. | 9.03% | 9.67% | 8.25% | — | — | |
| Philip Morris International Inc. | 11.96% | 14.67% | 22.06% | — | — | |
| ROA, Sector | ||||||
| Food, Beverage & Tobacco | 9.72% | 9.51% | 10.44% | — | — | |
| ROA, Industry | ||||||
| Consumer Staples | 8.28% | 8.95% | 8.75% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 1,630,988 ÷ 9,686,522 = 16.84%
2 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by a consistent expansion of the asset base coupled with fluctuating net income, resulting in a non-linear trend in asset utilization efficiency.
- Total Asset Growth
- A steady upward trajectory in total assets is observed, increasing from US$ 5,150,352 thousand in 2019 to US$ 9,686,522 thousand by 2023. This reflects a continuous accumulation of resources over the five-year period.
- Net Income Trends
- Net income exhibited volatility throughout the period. After an initial increase to US$ 1,409,594 thousand in 2020, earnings experienced a two-year decline, reaching a period low of US$ 1,191,624 thousand in 2022. A significant recovery occurred in 2023, with net income rising to its highest point in the analyzed period at US$ 1,630,988 thousand.
- Return on Assets (ROA) Analysis
- The ROA reached a peak of 22.73% in 2020, indicating optimal efficiency in converting assets into profit. A subsequent contraction is observed through 2022, where ROA fell to 14.37%. This decline is attributable to the fact that total assets continued to grow while net income decreased, creating a divergence that eroded profitability ratios. In 2023, a partial recovery to 16.84% was achieved, driven by the surge in net income, although the ratio remains below the levels recorded in 2019 and 2020.
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