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Molson Coors Beverage Company (TAP - Free Report) , on its 2023 Strategy Day held in New York, outlined an Acceleration Plan, building on the achievements of its 2019 Revitalization Plan. The company has noted that the Revitalization Plan positioned it to deliver sustainable growth over the past few years. With the success of the Revitalization Plan, TAP is focused on accelerating growth in the years ahead through its new Acceleration Plan.
Additionally, the company revealed its long-term financial outlook with expectations of amplified net revenue growth, margin expansion, attractive earnings per share growth and compelling free cash flow generation, which are likely to support reinvestment in value creation.
Investors were positive about the company’s announcement of the Acceleration Plan and the resulting long-term financial outlook. Consequently, shares of Molson Coors rose 1.6% in the after-hours trading session on Oct 3, 2023.
Moreover, the company’s focus on core competencies has been well-reflected in its share price, with the stock outperforming the industry and the market. Shares of this Zacks Rank #2 (Buy) company have rallied 27.9% in the past year against the industry’s decline of 3%. The stock also fared better than the sector’s fall of 2.7% and the S&P 500’s growth of 13.7% in the same period.
Image Source: Zacks Investment Research
Key Features of the Acceleration Plan
Molson Coors' new growth plan focuses on five key pillars to transform the company and drive sustained success in the global beverage market. These five key pillars focus on growing core brands, aggressively premiumizing its portfolio, expanding in Beyond Beer, building capabilities and efficiencies, and commitment to core values. The company aims to double down on its core strengths while diversifying into new and emerging categories.
Firstly, the company is keen on growing revenues of its core power brands. In the United States, its core brands, such as Coors Light, Miller Lite and Coors Banquet, have been witnessing sustained growth in the past several years, positioning them perfectly to capitalize on shifting consumer preferences, particularly in the premium segment in 2023. Similar gains have been observed in other key global markets, such as Molson in Canada and Ozujsko in Croatia, while Carling remains a top brand in the U.K. The company expects to maintain the momentum of these brands.
Secondly, Molson Coors is committed to aggressively premiumizing its portfolio, both in the Beer and Beyond Beer categories. Major successes like Madri in the U.K. and Simply Spiked in North America have bolstered net sales from the above-premium portfolio, increasing from 23% in 2019 to an impressive 28% in 2022. The company aims to expand the above-premium segment to approximately one-third of net sales in the medium term. This growth is expected to be driven by building on the current strength of the above-premium portfolio, along with compelling innovations, particularly in Beyond Beer.
In its third pillar, the company is focused on scaling and expanding in the Beyond Beer segment, which includes Flavor, Spirits and Non-Alcoholic products. These offerings support the premiumization strategy and emphasize scalable products in high-growth segments. From diverse flavors to acclaimed whiskey brands and energy drinks in partnership with Dwayne Johnson’s ZOA Energy, the Beyond Beer portfolio is poised to drive a substantial portion of the above-premium net sales growth target over the medium term.
Furthermore, Molson Coors plans to continue investing in building leading capabilities and efficiencies, including digital transformation, marketing effectiveness, sales execution and sustainability initiatives. These investments, which have already borne fruit since 2019, are expected to drive further growth and margin expansion through productivity improvements, operating efficiencies and cost savings.
Lastly, the company reaffirms its commitment to core values, notably putting people first. The contributions of more than 16,000 employees worldwide are acknowledged, along with the foundational principles of the Revitalization Plan. This holistic approach reflects Molson Coors' dedication not only to business growth but also to its employees, communities and the planet.
Long-Term Financial Targets
Molson Coors provided a comprehensive long-term financial outlook, showcasing its confidence in executing the ambitious growth plan.
Over the long term, Molson Coors expects to achieve low-single-digit annual net sales growth on a constant-currency basis. Moreover, the company’s targets indicate its commitment to enhancing its profitability. It expects to deliver mid-single-digit annual underlying income before income tax growth on a constant-currency basis. Additionally, it estimates annual underlying earnings per share growth in the high-single digits for the long term.
Molson Coors also expects to maintain a net-debt-to-underlying-EBITDA ratio of under 2.5X over the long term. This reflects a commitment to prudent financial management, including disciplined capital allocation and effective debt management.
With provisions for improved financial flexibility, the company also prioritized its capital allocation plan focused on investments in its business, net debt reduction and returning cash to shareholders. As part of the capital allocation plan, the company authorized a new $2-billion share repurchase program, extending for a five-year term.
Conclusion
By setting clear objectives across key financial metrics, the company demonstrates its commitment to delivering sustainable growth, enhancing profitability and maximizing shareholder value. With a clear vision and the accelerated growth plan, Molson Coors is poised to navigate the evolving beverage industry landscape and capitalize on emerging opportunities in the global market.
Other Key Picks
We have highlighted three other top-ranked stocks from the Consumer Staples sector, namely Constellation Brands (STZ - Free Report) , Coca-Cola (KO - Free Report) and Compania Cervecerias Unidas (CCU - Free Report) .
Constellation Brands has a trailing four-quarter earnings surprise of 4.4%, on average. It currently carries a Zacks Rank #2 (Buy). Shares of STZ have risen 5.2% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales and earnings suggests growth of 6.7% and 9.2%, respectively, from the year-ago period's reported figures.
Coca-Cola currently sports a Zacks Rank #2. Shares of KO have declined 2.5% in the past year. KO has a trailing four-quarter earnings surprise of 5.2%, on average.
The Zacks Consensus Estimate for Coca-Cola’s current financial year’s sales and earnings per share suggests growth of 4.7% and 6.1%, respectively, from the year-ago period’s reported figures.
Compania Cervecerias Unidas currently carries a Zacks Rank #2. Shares of CCU have gained 7.8% in the past year.
The Zacks Consensus Estimate for CCU’s current financial-year sales and earnings suggests growth of 15% and 72.9%, respectively, from the year-ago period's reported figures.
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Molson Coors (TAP) Unveils Acceleration Plan, Long-Term Goals
Molson Coors Beverage Company (TAP - Free Report) , on its 2023 Strategy Day held in New York, outlined an Acceleration Plan, building on the achievements of its 2019 Revitalization Plan. The company has noted that the Revitalization Plan positioned it to deliver sustainable growth over the past few years. With the success of the Revitalization Plan, TAP is focused on accelerating growth in the years ahead through its new Acceleration Plan.
Additionally, the company revealed its long-term financial outlook with expectations of amplified net revenue growth, margin expansion, attractive earnings per share growth and compelling free cash flow generation, which are likely to support reinvestment in value creation.
Investors were positive about the company’s announcement of the Acceleration Plan and the resulting long-term financial outlook. Consequently, shares of Molson Coors rose 1.6% in the after-hours trading session on Oct 3, 2023.
Moreover, the company’s focus on core competencies has been well-reflected in its share price, with the stock outperforming the industry and the market. Shares of this Zacks Rank #2 (Buy) company have rallied 27.9% in the past year against the industry’s decline of 3%. The stock also fared better than the sector’s fall of 2.7% and the S&P 500’s growth of 13.7% in the same period.
Image Source: Zacks Investment Research
Key Features of the Acceleration Plan
Molson Coors' new growth plan focuses on five key pillars to transform the company and drive sustained success in the global beverage market. These five key pillars focus on growing core brands, aggressively premiumizing its portfolio, expanding in Beyond Beer, building capabilities and efficiencies, and commitment to core values. The company aims to double down on its core strengths while diversifying into new and emerging categories.
Firstly, the company is keen on growing revenues of its core power brands. In the United States, its core brands, such as Coors Light, Miller Lite and Coors Banquet, have been witnessing sustained growth in the past several years, positioning them perfectly to capitalize on shifting consumer preferences, particularly in the premium segment in 2023. Similar gains have been observed in other key global markets, such as Molson in Canada and Ozujsko in Croatia, while Carling remains a top brand in the U.K. The company expects to maintain the momentum of these brands.
Secondly, Molson Coors is committed to aggressively premiumizing its portfolio, both in the Beer and Beyond Beer categories. Major successes like Madri in the U.K. and Simply Spiked in North America have bolstered net sales from the above-premium portfolio, increasing from 23% in 2019 to an impressive 28% in 2022. The company aims to expand the above-premium segment to approximately one-third of net sales in the medium term. This growth is expected to be driven by building on the current strength of the above-premium portfolio, along with compelling innovations, particularly in Beyond Beer.
In its third pillar, the company is focused on scaling and expanding in the Beyond Beer segment, which includes Flavor, Spirits and Non-Alcoholic products. These offerings support the premiumization strategy and emphasize scalable products in high-growth segments. From diverse flavors to acclaimed whiskey brands and energy drinks in partnership with Dwayne Johnson’s ZOA Energy, the Beyond Beer portfolio is poised to drive a substantial portion of the above-premium net sales growth target over the medium term.
Furthermore, Molson Coors plans to continue investing in building leading capabilities and efficiencies, including digital transformation, marketing effectiveness, sales execution and sustainability initiatives. These investments, which have already borne fruit since 2019, are expected to drive further growth and margin expansion through productivity improvements, operating efficiencies and cost savings.
Lastly, the company reaffirms its commitment to core values, notably putting people first. The contributions of more than 16,000 employees worldwide are acknowledged, along with the foundational principles of the Revitalization Plan. This holistic approach reflects Molson Coors' dedication not only to business growth but also to its employees, communities and the planet.
Long-Term Financial Targets
Molson Coors provided a comprehensive long-term financial outlook, showcasing its confidence in executing the ambitious growth plan.
Over the long term, Molson Coors expects to achieve low-single-digit annual net sales growth on a constant-currency basis. Moreover, the company’s targets indicate its commitment to enhancing its profitability. It expects to deliver mid-single-digit annual underlying income before income tax growth on a constant-currency basis. Additionally, it estimates annual underlying earnings per share growth in the high-single digits for the long term.
Molson Coors also expects to maintain a net-debt-to-underlying-EBITDA ratio of under 2.5X over the long term. This reflects a commitment to prudent financial management, including disciplined capital allocation and effective debt management.
With provisions for improved financial flexibility, the company also prioritized its capital allocation plan focused on investments in its business, net debt reduction and returning cash to shareholders. As part of the capital allocation plan, the company authorized a new $2-billion share repurchase program, extending for a five-year term.
Conclusion
By setting clear objectives across key financial metrics, the company demonstrates its commitment to delivering sustainable growth, enhancing profitability and maximizing shareholder value. With a clear vision and the accelerated growth plan, Molson Coors is poised to navigate the evolving beverage industry landscape and capitalize on emerging opportunities in the global market.
Other Key Picks
We have highlighted three other top-ranked stocks from the Consumer Staples sector, namely Constellation Brands (STZ - Free Report) , Coca-Cola (KO - Free Report) and Compania Cervecerias Unidas (CCU - Free Report) .
Constellation Brands has a trailing four-quarter earnings surprise of 4.4%, on average. It currently carries a Zacks Rank #2 (Buy). Shares of STZ have risen 5.2% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales and earnings suggests growth of 6.7% and 9.2%, respectively, from the year-ago period's reported figures.
Coca-Cola currently sports a Zacks Rank #2. Shares of KO have declined 2.5% in the past year. KO has a trailing four-quarter earnings surprise of 5.2%, on average.
The Zacks Consensus Estimate for Coca-Cola’s current financial year’s sales and earnings per share suggests growth of 4.7% and 6.1%, respectively, from the year-ago period’s reported figures.
Compania Cervecerias Unidas currently carries a Zacks Rank #2. Shares of CCU have gained 7.8% in the past year.
The Zacks Consensus Estimate for CCU’s current financial-year sales and earnings suggests growth of 15% and 72.9%, respectively, from the year-ago period's reported figures.