On Nov. 7, Monster Beverage (NASDAQ:MNST) held its quarterly earnings call. Despite regulatory headwinds the company still managed to expand gross sales by nearly 9%.  The company continues to innovate and expand territorially. The four takeaways below shed light on the company's direction.

PepsiCo's AMP and Red Bull
Fellow Fools Anna Lisa Kraft and Ted Cooper remarked on the head to head relationship with its primary competitor Red Bull. In this past quarter it seems that Monster Beverage beat Red Bull on many fronts. Company executives cited Nielsen data that gives indication that Monster maintains a small lead in market share of 34.3% versus 34.2% for Red Bull in the convenience and gas category for the five weeks ending Sept. 28.  Monster Beverage maintains a No. 2 spot in Canada  and a market share lead in Mexico (even though it experienced a sales decline in the latter).  Monster trounced PepsiCo's (NASDAQ:PEP) AMP in the Nielsen categories. In the combined convenience, grocery, drug, and mass merchandiser's category, Monster grew sales 9% for the 13 week period ending Sept. 28 versus AMP which decreased sales 16% during the same time frame.  In the convenience and gas category, Monster increased sales 10% year over year versus a 15% decline for AMP for the five week period ending Sept. 28.  As Anna Lisa Kraft noted, AMP represents a small portion of PepsiCo's sales and the AMP slump probably won't hurt PepsiCo much. Moreover, another PepsiCo energy drink, Mountain Dew Kickstart serves to make up for the shortfall on AMP .

Interestingly, competitors such as Coca-Cola Enterprises (NYSE: CCE) distribute Monster Beverage products in Europe. Coca-Cola Enterprises saw a 25% increase in its Monster Beverage sales. Coca-Cola Enterprises sold out more inventory than it brought in last quarter. Monster Beverage represents a bright spot for Coca-Cola Enterprises among macro-economic headwinds and dismal still beverage volume. 

Good fundamental standing
Monster Beverage sported solid fundamentals in the most recent quarter. Cash and investments came to 64% of stockholder's equity.  Monster Beverage possesses no long-term interest bearing debt.  Its free cash flow increased an impressive 29%.  The company certainly holds the resources necessary for expansion and clearing any regulatory hurdles. Monster's Ultra Line and Rehab Pink Lemonade contributed  to Monster's year over year gross margin expansion from 50.5% to 52.1%.  Legal costs stemming from claims on Monster Energy's alleged involvement in "five deaths dating back to 2004" made a huge impact on operating and net profit margins. 

Margin expansion
Monster has plans in place to further expand margins. It plans to build additional production plants in Southern Europe to help reduce freight and damage costs. In addition, it also plans avenues of production in South Africa which will reduce lead times and freight costs from Europe to South Africa. Finally, Monster wants to build distribution infrastructure in Japan and Brazil. 

Prudence on share repurchases
In a move of sheer prudence, Monster hasn't made any share repurchases under its April 2013 plan.  This represents a wise move in the wake of possible cash needs for expansion and legal fees.  Regardless of Monster's recent correction in stock price it still gave shareholders a market beating total return of 19% since April 2013.  However, it also still trades at 30 times earnings exceeding the S&P 500 P/E of 20. This sends a signal that company executives may feel that the stock price resides in the overvalued range.

Weighing the Risks
Monster's solid fundamentals mean that the company sports a low fundamental risk rating. However, increasing regulatory scrutiny means that the political risk factor remains high. Concern about the health risks surrounding energy drinks suggests that information lurks in the shadows that could implicate the industry and its players, like Monster, meaning that information risk is also high. Also, the stock still trades like an unimpeded growth company meaning that market price risk remains high. Monster needs to go through a steep market correction to compensate for the high political and information risks involved. You may want to sit on the sidelines for this company until a better price comes along.