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Factors Likely to Influence Molson Coors' (TAP) Q3 Earnings
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Molson Coors Brewing Company (TAP - Free Report) is slated to release third-quarter 2018 results on Oct 31.
The company has an unimpressive earnings surprise history, having lagged estimates in four of the last seven quarters. Also, it delivered an average earnings miss of 6.8% in the trailing four quarters.
Molson Coors Brewing Company Price, Consensus and EPS Surprise
Nevertheless, the Zacks Consensus Estimate for third-quarter earnings is pegged at $1.57, mirroring 17.2% growth year over year. Notably the consensus mark was revised downward over the past seven days.
Let’s see how things are shaping prior to the earnings announcement.
Factors at Play
Molson Coors has a dismal sales trend, missing estimates in seven of the trailing eight quarters. Although the company delivered a positive sales surprise in the last reported quarter, the metric declined year over year due to lower financial volume and the adoption of the new revenue recognition accounting standard. Further, the company has been witnessing softness in the U.S. beer category. It has been posting weak beer volumes in the United States for quite some time due to tough industry conditions. These apart, consumers’ changing preferences, aging population and stiff competition from other alcohol beverages have been the other primary reasons behind the company’s disappointing performance.
Also, Molson Coors continues to battle input cost inflation, aluminum and fuel costs in particular, which has been posing challenges for a while now. Management expects these hurdles to linger in 2018.
Consequently, the company reiterated its previously issued COGS per hectoliter outlook for the Europe, Canada and International segments, while raised the view for the United States. For 2018, management anticipates COGS per hectoliter to increase in low-single-digits in the Canada and Europe segments, while the same is expected to decline low-single-digits in the International segment. Meanwhile, in the United States, Molson Coors anticipates COGS per hectoliter to increase in mid-single-digit compared with the previous low-single-digit forecast.
The Zacks Consensus Estimate for third-quarter sales in the United States, Europe and Canada stands at $1,918 million, $567 million and $373 million, respectively. In the year-ago quarter, sales from these three segments came in at $1,892 million, $561 million and $406 million, respectively. Notably, the consensus estimate for the overall quarterly sales is pegged at $2,895 million, up 0.7% from the year-ago actual figure.
The aforementioned headwinds have led the stock to plunge 30.9% year to date, wider than the industry’s 21.7% decline.
Nevertheless, Molson Coors’ restructuring initiatives to reduce overhead costs and boost profitability look promising. These initiatives included closure of underperforming breweries, improvement of efficiencies in finance, administration and human resources, and reduction of labor and general overhead costs. Additionally, the company has been making efforts to improve its supply-chain network and build on efficiencies across the business to generate additional resources for investing in brand building and innovation. These cost-saving efforts are likely to result in the company’s EBITDA margin expansion.
Molson Coors also remains on track with its First Choice plan, which is likely to improve its top and bottom lines. The First Choice plan aims at solidifying and preimmunizing portfolio, enhancing customer relations and generating significant profits from international businesses through improved capability, productivity and continued cost savings. Notably, this approach supports its key priorities, including cash generation, margin improvement and enhancing shareholder returns. Additionally, the company focuses on expanding its portfolio through acquisitions besides having a robust brand portfolio.
What Does Zacks Model Say?
Our proven model does not conclusively show that Molson Coors is likely to beat earnings estimates in the third quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Molson Coors has an Earnings ESP of -0.53% and a Zacks Rank #4 (Sell), which makes our surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
The Estee Lauder Companies Inc. (EL - Free Report) has an Earnings ESP of +1.19% and a Zacks Rank #3.
Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +3.01% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Factors Likely to Influence Molson Coors' (TAP) Q3 Earnings
Molson Coors Brewing Company (TAP - Free Report) is slated to release third-quarter 2018 results on Oct 31.
The company has an unimpressive earnings surprise history, having lagged estimates in four of the last seven quarters. Also, it delivered an average earnings miss of 6.8% in the trailing four quarters.
Molson Coors Brewing Company Price, Consensus and EPS Surprise
Molson Coors Brewing Company Price, Consensus and EPS Surprise | Molson Coors Brewing Company Quote
Nevertheless, the Zacks Consensus Estimate for third-quarter earnings is pegged at $1.57, mirroring 17.2% growth year over year. Notably the consensus mark was revised downward over the past seven days.
Let’s see how things are shaping prior to the earnings announcement.
Factors at Play
Molson Coors has a dismal sales trend, missing estimates in seven of the trailing eight quarters. Although the company delivered a positive sales surprise in the last reported quarter, the metric declined year over year due to lower financial volume and the adoption of the new revenue recognition accounting standard. Further, the company has been witnessing softness in the U.S. beer category. It has been posting weak beer volumes in the United States for quite some time due to tough industry conditions. These apart, consumers’ changing preferences, aging population and stiff competition from other alcohol beverages have been the other primary reasons behind the company’s disappointing performance.
Also, Molson Coors continues to battle input cost inflation, aluminum and fuel costs in particular, which has been posing challenges for a while now. Management expects these hurdles to linger in 2018.
Consequently, the company reiterated its previously issued COGS per hectoliter outlook for the Europe, Canada and International segments, while raised the view for the United States. For 2018, management anticipates COGS per hectoliter to increase in low-single-digits in the Canada and Europe segments, while the same is expected to decline low-single-digits in the International segment. Meanwhile, in the United States, Molson Coors anticipates COGS per hectoliter to increase in mid-single-digit compared with the previous low-single-digit forecast.
The Zacks Consensus Estimate for third-quarter sales in the United States, Europe and Canada stands at $1,918 million, $567 million and $373 million, respectively. In the year-ago quarter, sales from these three segments came in at $1,892 million, $561 million and $406 million, respectively. Notably, the consensus estimate for the overall quarterly sales is pegged at $2,895 million, up 0.7% from the year-ago actual figure.
The aforementioned headwinds have led the stock to plunge 30.9% year to date, wider than the industry’s 21.7% decline.
Nevertheless, Molson Coors’ restructuring initiatives to reduce overhead costs and boost profitability look promising. These initiatives included closure of underperforming breweries, improvement of efficiencies in finance, administration and human resources, and reduction of labor and general overhead costs. Additionally, the company has been making efforts to improve its supply-chain network and build on efficiencies across the business to generate additional resources for investing in brand building and innovation. These cost-saving efforts are likely to result in the company’s EBITDA margin expansion.
Molson Coors also remains on track with its First Choice plan, which is likely to improve its top and bottom lines. The First Choice plan aims at solidifying and preimmunizing portfolio, enhancing customer relations and generating significant profits from international businesses through improved capability, productivity and continued cost savings. Notably, this approach supports its key priorities, including cash generation, margin improvement and enhancing shareholder returns. Additionally, the company focuses on expanding its portfolio through acquisitions besides having a robust brand portfolio.
What Does Zacks Model Say?
Our proven model does not conclusively show that Molson Coors is likely to beat earnings estimates in the third quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Molson Coors has an Earnings ESP of -0.53% and a Zacks Rank #4 (Sell), which makes our surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks With Favorable Combination
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Archer Daniels Midland Company (ADM - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Estee Lauder Companies Inc. (EL - Free Report) has an Earnings ESP of +1.19% and a Zacks Rank #3.
Monster Beverage Corporation (MNST - Free Report) has an Earnings ESP of +3.01% and a Zacks Rank #3.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>