Back to top

Analyst Blog

Shares of Molson Coors Brewing Company (TAP - Analyst Report) hit a 52-week high of $56.49 on Dec 31 and eventually closed at $56.15. This beverage company has been witnessing increasing momentum ever since it reported solid third quarter results on Nov 6.

The company’s long-term estimated earnings per share (EPS) growth rate is 4.97%. Average volume of shares traded over the last three months came in at approximately 820K.

Better-Than-Expected Results

On Nov 6, Molson Coors reported its third quarter 2013 results. Adjusted earnings of $1.45 per share beat the Zacks Consensus Estimate by 6.6% and improved 5.8% from the prior-year quarter. The upswing in earnings was driven by improved pre-tax earnings in its U.S., Europe and International businesses. Lower interest expense and tax rate also led to earnings growth in the quarter.

Net sales declined 2% year-over-year and also lagged the Zacks Consensus Estimate by 1.2% in the quarter. Though sales of this Zacks Rank #3 (Hold) company were impacted by weak consumer demand across all markets owing to macro-economic headwinds, it continued to invest in its core brands. Though Molson Coors has been struggling with declining sales volume for the past three years, we believe that the company’s initiatives and increased marketing investments in its brands will help drive volumes in future quarter.

Underlying pre-tax income also increased 4.2% in the third quarter of 2013.

We are encouraged by the fact that the company is generating a mid-single-digit percent of sales owing to its product innovation. The company’s above-premium brand portfolio is growing at a double-digit rate globally, which is also appealing. The company is also on track with its cost savings program and cash generation targets. Molson Coors paid nearly $282 million worth of net debt in the third quarter, which in turn will improve the company’s efficiency.

Other Stocks to Consider

Other better-ranked companies in the consumer staples sector include Boston Beer Co. (SAM - Analyst Report), Hain Celestial Group Inc (HAIN - Analyst Report) and Green Mountain Coffee Roasters Inc. (GMCR - Analyst Report), all of them holding a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.