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Monster Beverage Corp (NAS:MNST)
Operating Income
$757 Mil (TTM As of Jun. 2015)

Monster Beverage Corp's operating income for the three months ended in Jun. 2015 was $366 Mil. Its operating income for the trailing twelve months (TTM) ended in Jun. 2015 was $757 Mil.

Operating margin is calculated as operating income divided by its revenue. Monster Beverage Corp's operating income for the three months ended in Jun. 2015 was $366 Mil. Monster Beverage Corp's revenue for the three months ended in Jun. 2015 was $694 Mil. Therefore, Monster Beverage Corp's operating margin for the quarter that ended in Jun. 2015 was 52.78%.

Monster Beverage Corp's 3-Year average Growth Rate for operating margin was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt’s definition. Monster Beverage Corp's annualized return on capital for the quarter that ended in Jun. 2015 was 77.13%. Monster Beverage Corp's annualized return on capital (Joel Greenblatt’s) for the quarter that ended in Jun. 2015 was 304.27%.


Definition

Operating income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Monster Beverage Corp's Operating Income for the fiscal year that ended in Dec. 2014 is calculated as

Operating Income(A: Dec. 2014 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=2464.867-1125.057-592.305
-Research & Development-Depreciation, Depletion & Amortization-Others
-0-25.651--25.651
=748

Monster Beverage Corp's Operating Income for the quarter that ended in Jun. 2015 is calculated as

Operating Income(Q: Jun. 2015 )
=Revenue-Cost of Goods Sold-Selling, General, & Admin. Expense
=693.722-299.214-189.839
-Research & Development-Depreciation, Depletion & Amortization-Others (1)
-0-6.779--168.249
=366

Operating Income(Q: Jun. 2015 )
=EBITDA-Depreciation, Depletion & Amortization-Others (2)
=372.918-6.779-0
=366

Monster Beverage Corp Operating Income for the trailing twelve months (TTM) ended in Jun. 2015 was 189.907 (Sep. 2014 ) + 192.921 (Dec. 2014 ) + 7.629 (Mar. 2015 ) + 366.139 (Jun. 2015 ) = $757 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt’s definition.

Monster Beverage Corp's annualized Return on Capital (ROC) for the quarter that ended in Jun. 2015 is calculated as:

Return on Capital (ROC)(Q: Jun. 2015 )
=NOPAT/Average Invested Capital
=Oper. Inc.*(1-Tax Rate)/( (Invested Capital (Q: Mar. 2015 ) + Invested Capital (Q: Jun. 2015 ))/2)
=1464.556 * ( 1 - 37.28% )/( (458.283 + 1923.667)/2)
=918.5695232/1190.975
=77.13 %

where

Invested Capital(Q: Mar. 2015 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt + Short-Term Debt + Total Equity - Cash
=0 + 0 + 1468.354 - 1010.071
=458.283

Invested Capital(Q: Jun. 2015 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt + Short-Term Debt + Total Equity - Cash
=0 + 0 + 4854.82 - 2931.153
=1923.667

Note: The Operating Income data used here is four times the quarterly (Jun. 2015) operating income data.

2. Joel Greenblatt’s definition of Return on Capital:

Monster Beverage Corp's annualized Return on Capital (Joel Greenblatt’s) for the quarter that ended in Jun. 2015 is calculated as:

ROC (Joel Greenblatt’s)(Q: Jun. 2015 )
=EBIT/Average of (Net fixed Assets + Net Working Capital)
=EBIT/Average of (Net PPE+Net Working Capital)
     Q: Mar. 2015  Q: Jun. 2015
=EBIT/( ( (Net PPE + Net Working Capital) + (Net PPE + Net Working Capital) )/2 )
=1464.556/( ( (88.296 + max(282.537, 0)) + (92.538 + max(499.299, 0)) )/2 )
=1464.556/( ( 370.833 + 591.837 )/2 )
=1464.556/481.335
=304.27 %

where Working Capital is:

Working Capital(Q: Mar. 2015 )
=(Accts Rec. + Inventory + Other Curr. Ass.) - (Accts Pay. + Defer. Rev. + Other Curr. Liab.)
=(343.427 + 197.914 + 290.483) - (538.703 + 10.584 + 6.03961325396E-14)
=282.537

Working Capital(Q: Jun. 2015 )
=(Accts Rec. + Inventory + Other Curr. Ass.) - (Accts Pay. + Defer. Rev. + Other Curr. Liab.)
=(372.669 + 180.892 + 437.665) - (465.51 + 26.417 + 2.84217094304E-14)
=499.299

When net working capital is negative, 0 is used.

Note: The Earnings Before Interest and Taxes (EBIT) data used here is four times the quarterly (Jun. 2015) EBIT data.

3. Operating Income is also linked to Operating Margin:

Monster Beverage Corp's Operating Margin for the quarter that ended in Jun. 2015 is calculated as:

Operating Margin=Operating Income (Q: Jun. 2015 )/Total Revenue (Q: Jun. 2015 )
=366.139/693.722
=52.78 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Be Aware

Compared with a company’s EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company’s revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)’s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia’s Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus’s Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.


Related Terms

Revenue, Cost of Goods Sold, Selling, General, & Admin. Expense, Research & Development, Gross Profit, EBITDA, Depreciation, Depletion and Amortization, Return on Capital, Return on Capital (Joel Greenblatt’s), Earnings Yield, Operating Margin, EBIT


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Monster Beverage Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Operating Income 103159231164337348456551573748

Monster Beverage Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Operating Income 1071791511351492161901938366
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