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Molson Coors (TAP) Up 7.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Molson Coors Brewing (TAP - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Molson Coors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Molson Coors Q4 Earnings Miss Estimates on Inflation
Molson Coors reported fourth-quarter 2021 results, wherein earnings lagged the Zacks Consensus Estimate, while sales beat the same. Both top and bottom lines improved year over year.
Results reflected gains from the revitalization plan and premiumization of its global portfolio. Strength across its Coors Light and Miller Lite brands, as well as its beyond beer approach, bode well. However, inflationary pressure and the resurgence of COVID-19 cases in the fourth quarter acted as deterrents.
The company remains on track with investments in its global hard seltzer production capacity via expansions in Canada and the U.K. Encouraged by progress in its revitalization plan, management issued a favorable view for 2022.
Quarter in Detail
The company’s adjusted earnings of 81 cents per share surged 102.5% year over year but lagged the Zacks Consensus Estimate of 90 cents.
Net sales increased 14.2% to $2,619.2 million and surpassed the Zacks Consensus Estimate of $2,571 million. This can be attributable to financial volume growth in the Americas and EMEA & APAC segments, as well as solid pricing and positive mix.
On a constant-currency (cc) basis, net sales rose 13.7%. Net sales per hectoliter increased 3.8% on a brand-volume basis, driven by strong net pricing in both segments, favorable brand mix linked to portfolio premiumization and a favorable channel mix due to the further reopening of the on-premise channel.
Molson Coors’ worldwide brand volumes advanced 2.3% to 19.8 million. Financial volumes rose 7.4% to 21.1 million hectoliters, primarily driven by favorable U.S. domestic shipment trends, brand volume growth and lesser on-premise restrictions in EMEA & APAC, Latin America and Canada.
Underlying (non-GAAP) EBITDA grew 21.9% year over year and on a constant-currency basis to $457.3 million. This can be attributable to robust sales, solid pricing and favorable sales mix, which somewhat offset cost inflation, particularly in input materials, as well as elevated transportation costs and higher MG&A spending.
Segmental Details
Molson Coors operates in the following geographical segments.
North America: Net sales in the segment rose 7.6% to $2,145.9 million on a reported basis and 7.1% at cc, driven by higher financial volumes. Financial volumes rose 3.6% year over year on favorable domestic shipment timing in the United States, brand volume growth in Canada and Latin America, positive net pricing, and favorable sales mix.
Meanwhile, North America brand volume dropped 1.8% on a 3.8% fall in the United States, owing to weakness in the economy brands. However, brand volume improved 6% in Canada and 12.4% in Latin America due to reduced on-premise restrictions in the fourth quarter and growth in its premium portfolio.
Net sales per hectoliter, on a brand volume basis, rose 2.9% at cc on a favorable brand mix and higher net pricing. Underlying EBITDA increased 3.5% on a reported basis to $401.9 million and 3.4% at cc, driven by positive pricing, higher financial volumes and favorable sales mix, which somewhat offset cost inflation, particularly in input materials, elevated transportation costs and higher MG&A spending.
EMEA & APAC: The segment’s net sales (on a reported basis) rose 56.4% to $473.9 million and 56.5% at cc. The uptick was due to financial volume growth, favorable pricing and positive sales mix. Net sales per hectoliter (brand volume basis) for the segment advanced 17.4% at cc, resulting from a favorable channel and brand mix, as well as higher pricing.
The segment’s financial volumes grew 21.4% and brand volumes were up 15.7%, owing to growth in the premium portfolio as well as lesser restrictions in the fourth quarter. The segment’s underlying EBITDA was $48.5 million against a loss of $20.8 million on higher financial volumes, favorable pricing and sales mix, which somewhat offset cost inflation, particularly in input materials, elevated transportation costs and higher MG&A spend.
Other Financial Updates
Molson Coors ended the fourth quarter with cash and cash equivalents of $637.4 million. At the end of fourth-quarter 2021, the company had a total debt of $7.1 billion, resulting in net debt of $6.5 billion. In July, the company repaid 2.1% senior notes worth $1 billion, which matured on Jul 15.
In 2021, it generated cash from operating activities of $1,573.5 million, resulting in an underlying free cash flow of $1,082.8 million.
The company hiked the quarterly dividend by 12% in the fourth quarter. It will now pay a quarterly dividend of 38 cents on its class A and class B common shares on Mar 18. It also approved a share repurchase program, wherein the company can purchase up to an aggregate of $200 million of its Class B common stock till Mar 31, 2026.
Outlook
Despite the continued uncertainties related to the pandemic, management issued the 2022 view. The company is progressing with its revitalization plan, which targets long-term revenue and underlying EBITDA expansion.
Net sales are projected to grow in the mid-single digits at cc. Underlying EBITDA is likely to grow year over year in the high-single digits at cc. Management estimates achieving a net debt to underlying EBITDA ratio of 3.0X by 2022.
Underlying depreciation and amortization are projected at $750 million. The company now expects an underlying effective tax rate of 22-24%. Consolidated net interest expenses are anticipated to be $265 million, plus or minus 5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 160.42% due to these changes.
VGM Scores
At this time, Molson Coors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Molson Coors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Molson Coors (TAP) Up 7.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Molson Coors Brewing (TAP - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Molson Coors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Molson Coors Q4 Earnings Miss Estimates on Inflation
Molson Coors reported fourth-quarter 2021 results, wherein earnings lagged the Zacks Consensus Estimate, while sales beat the same. Both top and bottom lines improved year over year.
Results reflected gains from the revitalization plan and premiumization of its global portfolio. Strength across its Coors Light and Miller Lite brands, as well as its beyond beer approach, bode well. However, inflationary pressure and the resurgence of COVID-19 cases in the fourth quarter acted as deterrents.
The company remains on track with investments in its global hard seltzer production capacity via expansions in Canada and the U.K. Encouraged by progress in its revitalization plan, management issued a favorable view for 2022.
Quarter in Detail
The company’s adjusted earnings of 81 cents per share surged 102.5% year over year but lagged the Zacks Consensus Estimate of 90 cents.
Net sales increased 14.2% to $2,619.2 million and surpassed the Zacks Consensus Estimate of $2,571 million. This can be attributable to financial volume growth in the Americas and EMEA & APAC segments, as well as solid pricing and positive mix.
On a constant-currency (cc) basis, net sales rose 13.7%. Net sales per hectoliter increased 3.8% on a brand-volume basis, driven by strong net pricing in both segments, favorable brand mix linked to portfolio premiumization and a favorable channel mix due to the further reopening of the on-premise channel.
Molson Coors’ worldwide brand volumes advanced 2.3% to 19.8 million. Financial volumes rose 7.4% to 21.1 million hectoliters, primarily driven by favorable U.S. domestic shipment trends, brand volume growth and lesser on-premise restrictions in EMEA & APAC, Latin America and Canada.
Underlying (non-GAAP) EBITDA grew 21.9% year over year and on a constant-currency basis to $457.3 million. This can be attributable to robust sales, solid pricing and favorable sales mix, which somewhat offset cost inflation, particularly in input materials, as well as elevated transportation costs and higher MG&A spending.
Segmental Details
Molson Coors operates in the following geographical segments.
North America: Net sales in the segment rose 7.6% to $2,145.9 million on a reported basis and 7.1% at cc, driven by higher financial volumes. Financial volumes rose 3.6% year over year on favorable domestic shipment timing in the United States, brand volume growth in Canada and Latin America, positive net pricing, and favorable sales mix.
Meanwhile, North America brand volume dropped 1.8% on a 3.8% fall in the United States, owing to weakness in the economy brands. However, brand volume improved 6% in Canada and 12.4% in Latin America due to reduced on-premise restrictions in the fourth quarter and growth in its premium portfolio.
Net sales per hectoliter, on a brand volume basis, rose 2.9% at cc on a favorable brand mix and higher net pricing. Underlying EBITDA increased 3.5% on a reported basis to $401.9 million and 3.4% at cc, driven by positive pricing, higher financial volumes and favorable sales mix, which somewhat offset cost inflation, particularly in input materials, elevated transportation costs and higher MG&A spending.
EMEA & APAC: The segment’s net sales (on a reported basis) rose 56.4% to $473.9 million and 56.5% at cc. The uptick was due to financial volume growth, favorable pricing and positive sales mix. Net sales per hectoliter (brand volume basis) for the segment advanced 17.4% at cc, resulting from a favorable channel and brand mix, as well as higher pricing.
The segment’s financial volumes grew 21.4% and brand volumes were up 15.7%, owing to growth in the premium portfolio as well as lesser restrictions in the fourth quarter. The segment’s underlying EBITDA was $48.5 million against a loss of $20.8 million on higher financial volumes, favorable pricing and sales mix, which somewhat offset cost inflation, particularly in input materials, elevated transportation costs and higher MG&A spend.
Other Financial Updates
Molson Coors ended the fourth quarter with cash and cash equivalents of $637.4 million. At the end of fourth-quarter 2021, the company had a total debt of $7.1 billion, resulting in net debt of $6.5 billion. In July, the company repaid 2.1% senior notes worth $1 billion, which matured on Jul 15.
In 2021, it generated cash from operating activities of $1,573.5 million, resulting in an underlying free cash flow of $1,082.8 million.
The company hiked the quarterly dividend by 12% in the fourth quarter. It will now pay a quarterly dividend of 38 cents on its class A and class B common shares on Mar 18. It also approved a share repurchase program, wherein the company can purchase up to an aggregate of $200 million of its Class B common stock till Mar 31, 2026.
Outlook
Despite the continued uncertainties related to the pandemic, management issued the 2022 view. The company is progressing with its revitalization plan, which targets long-term revenue and underlying EBITDA expansion.
Net sales are projected to grow in the mid-single digits at cc. Underlying EBITDA is likely to grow year over year in the high-single digits at cc. Management estimates achieving a net debt to underlying EBITDA ratio of 3.0X by 2022.
Underlying depreciation and amortization are projected at $750 million. The company now expects an underlying effective tax rate of 22-24%. Consolidated net interest expenses are anticipated to be $265 million, plus or minus 5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 160.42% due to these changes.
VGM Scores
At this time, Molson Coors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Molson Coors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.