Q2 Results Beat Expectations Across the Board, with Monster Beverage’s Global Volume Growth and Innovation Momentum Continuing to Strengthen

Overview

The report believes that Monster Beverage delivered across-the-board beats in revenue, gross margin, and EPS in Q2 despite elevated market expectations, rising aluminum can and transportation costs, and a pressured consumer environment. Growth was primarily driven by a 22.3% increase in volume, with particularly strong performance in international markets. Goldman Sachs believes the company is reinforcing its growth momentum through global category expansion, ongoing innovation, selective pricing, revenue growth management, and its partnership with Coca-Cola; therefore, it reiterates its Buy rating and raises earnings forecasts and the target price.

Core views

First, Q2 revenue increased 20.2% year over year and 17.9% on an FX-adjusted basis, showing that growth was not primarily dependent on currency effects; second, international sales grew 34.6%, with all regions achieving double-digit or higher growth, and global penetration of the energy drink category still has room to increase; third, the Ultra series and multiple new products continue to gain consumer acceptance, and the staggered launch of new products helps address tougher year-over-year comparisons in the second half; fourth, the U.S. plans to implement selective pricing in Q4 2026, while EMEA achieved low-single-digit pricing in Q2, reflecting brand pricing power and revenue growth management potential; fifth, aluminum cans, transportation, the rising mix of international operations, and the alcoholic beverages business may weigh on near-term margins, but pricing, product mix, and supply cost optimization are expected to support long-term gross profit dollar growth.

Analysis framework

The report assesses the company’s outlook by combining quarterly income statement comparisons with consensus expectations, regional and segment breakdowns, volume and pricing contribution analysis, consumer surveys, retailer channel feedback, product innovation tracking, and relative valuation analysis. The target price is based on an equal-weighted valuation using forward P/E and enterprise value multiples, applying updated forecasts for the next four quarters.

Methodology notes

• Earnings analysisActual results versus expectations gap analysis

  Compare revenue, gross margin, expense ratio, and EPS against Goldman Sachs forecasts and consensus expectations.

  Q2 revenue growth and gross margin were significantly above expectations, and adjusted EPS also beat expectations; growth quality was assessed through breakdowns by volume, FX, region, and business segment.

• Consumer researchHundredX consumer intent analysis

  Use net promoter score and net consumption intent to measure brand perception and future purchase propensity.

  The data cover 13.6 million pieces of feedback from 444,000 people since August 2021; for the three months ended June 2026, MNST’s net promoter score recently improved and was slightly above the category, while net purchase intent was broadly in line with the category.

• Channel researchRetailer feedback and shelf space survey

  Validate end-market momentum through retailers’ expectations for sales growth and allocation of shelf and cooler space.

  Retailers expect MNST shelf and cooler space to increase by approximately 5% in 2026, providing channel support for product placement and sales growth.

• Valuation methodsEqual-weighted valuation using P/E and enterprise value multiples

  Equally weight valuation results based on P/E and enterprise value multiples using forecasts for the next four quarters.

  The $110 target price is based on a 41.0x P/E multiple and a 29.5x enterprise value multiple, with both valuation multiples unchanged; the target price increase mainly comes from higher earnings forecasts.

• Factor analysisGS Factor Profile

  Compare the stock with the market and industry peers across growth, financial returns, valuation multiples, and composite metrics.

  The growth factor uses forward revenue, EBITDA, and EPS growth; the financial returns factor uses ROE, ROCE, and CROCI; the valuation factor combines P/E, P/B, and enterprise value-related multiples.

• M&A analysisGoldman Sachs M&A Rank

  Assess the likelihood of a company becoming an acquisition target on a scale of 1 to 3.

  MNST has an M&A rank of 3, corresponding to a relatively low acquisition probability of 0% to 15%; therefore, M&A factors are not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Monster Beverage Corp. (MNST.US)

  Core research subject

  Strengths

  Global energy drink category growth, 22.3% Q2 volume growth, rapid international business expansion, strong product innovation, brand pricing power, growth in Ultra zero-sugar products, and distribution opportunities from the partnership with Coca-Cola.

  Weaknesses

  The operating expense ratio was higher than expected, the rising mix of international and alcoholic beverages businesses is unfavorable to the margin mix, and near-term aluminum can and transportation costs remain under pressure.

  Comparison

  Current expected FY2027 enterprise value multiple and P/E are both at an approximately 22% premium to the company’s three-year historical average; the forward valuation premium versus beverage peers is notably above historical levels.

  Risks

  Deterioration in convenience store traffic, weakness in Green Monster sales, increases in aluminum can and transportation costs, negative geographic mix from international operations, decline in the alcoholic beverages business, packaging-related ESG pressure, and increases in sugar taxes and soda taxes.

Key data

• Q2 revenue growthUp 20.2% year over yearUp 17.9% on an FX-adjusted basis; Goldman Sachs forecast was 14.3%, and consensus expectation was 15.4%.
• Q2 volume growthUp 22.3% year over yearThe report views this as one of the more attractive volume-driven growth performances within the consumer staples sector.
• Q2 international sales$1.16 billion, up 34.6% year over yearAccounted for approximately 46% of total sales, above approximately 41% in the same period last year.
• Q2 adjusted gross margin55.9%Up approximately 20 basis points year over year, above Goldman Sachs and consensus expectations of 54.5%.
• Q2 adjusted operating expense ratio26.8%Up approximately 170 basis points year over year and above Goldman Sachs’ forecast of 24.5%, mainly affected by increases in distribution, freight, fuel, and marketing investments.
• Q2 adjusted EPS$0.59, up approximately 19% year over yearAbove Goldman Sachs’ forecast of $0.57 and consensus expectation of $0.58.
• July global sales growthUp 13.9% year over yearUp 13.5% excluding FX; the two-year stacked growth rate was 38.6%, above 31.3% in Q2.
• FY2026 revenue forecast$9.7134 billionPrevious forecast was $9.5656 billion, corresponding to 17.1% year-over-year growth.
• FY2026 and FY2027 EPS forecasts$2.27 / $2.54Previously $2.25 and $2.51, respectively, both raised by approximately 1%.
• 12-month target price$110Previously $106, implying 16.8% potential upside versus the current price of $94.16.
• Current valuation27.2x expected FY2027 enterprise value multiple and 36.3x expected P/EBoth represent a 22% premium to the company’s three-year historical average; the valuation premium versus beverage peers is also at an elevated level.
• Remaining share repurchase authorizationApproximately $900 millionThe company did not repurchase shares in Q2, and the authorization remained available as of August 5, 2026.

Impact & implications

The earnings beat and upward revision to earnings forecasts strengthen the fundamental support for target price upside. International expansion, a rising mix of Ultra zero-sugar products, staggered new product launches, and more normalized selective pricing are expected to maintain healthy revenue growth in a high-base environment and drive continued expansion in gross profit dollars. However, the current valuation is already significantly above its own historical average and beverage peers, meaning the share price has high requirements for sustained growth and margin improvement; if volume, channel traffic, or cost improvement falls short of expectations, the valuation may face compression.

Risks

• Aluminum can costs are expected to continue rising modestly quarter over quarter at least through the end of 2026, which may pressure near-term gross margin.
• International business is growing faster than the U.S. business, but its margins are lower, which may create a negative geographic mix impact.
• The alcoholic beverages business has lower margins, and Q2 sales declined 15.2% year over year.
• Revenue comparisons in the second half will become progressively tougher, with revenue growth in the second half of 2025 at approximately 17%, increasing the difficulty of sustaining growth.
• If convenience store traffic or sales of the core Green Monster product weaken, U.S. market performance will be affected.
• Increased distribution, freight, fuel, and marketing investments may keep the operating expense ratio at a relatively high level.
• The current valuation is significantly above the company’s own historical average and beverage peers, posing valuation compression risk.
• Packaging-related ESG requirements and rising sugar taxes and soda taxes may increase costs and suppress demand.
• Goldman Sachs discloses that it has investment banking and other securities service relationships with Monster Beverage Corp. and makes a market in related securities or derivatives; investors should pay attention to potential conflicts of interest.

What to watch

• The scope of implementation, channel acceptance, and volume elasticity of selective U.S. pricing in Q4 2026.
• Pricing cadence, market share, and margin changes in EMEA and other international markets.
• Whether the strong July sales momentum can continue in the high-base environment of the second half.
• Launch details for fall 2026 new products and the 2027 innovation pipeline at the NACS show.
• Growth of the Ultra series, the mix of zero-sugar products, and their contribution to product mix and gross margin.
• Quarterly trends in aluminum can, freight, and fuel costs, as well as progress in supply cost optimization.
• The impact of the rising international business mix on the company’s overall gross margin and operating margin.
• Whether retailers’ expected approximately 5% increase in shelf and cooler space can translate into actual distribution and sales growth.
• The timing of use of the remaining approximately $900 million repurchase authorization and capital allocation plans.
• Growth divergence among the three business segments: Monster Energy Drinks, Strategic Brands, and Alcohol Brands.