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Molson Coors (TAP) Surpasses Industry in a Year: What's Ahead?
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Molson Coors Beverage Company (TAP - Free Report) is slated for growth, driven by brand strength, and strong performances across its portfolio and both business units. Additionally, the company is well-placed on the back of its revitalization plan and the premiumization of the global portfolio.
A strong portfolio performance, strength in both business units, and continued momentum in Coors Light and Miller Lite in the United States have been aiding TAP’s performance. Net sales grew 12.4% on a reported basis, while it rose 11% on a constant-currency basis, driven by a favorable price and sales mix, higher financial volume, and the positive impacts of foreign currency.
The company’s business trends and initiatives have been well-reflected in its share price. Shares of this Zacks Rank #3 (Hold) company have rallied 28.9% in the past year against the industry’s decline of 3.4%. TAP also fared better than the sector’s decline of 5.1% and the S&P 500’s growth of 22.5% in the same period.
Image Source: Zacks Investment Research
What’s Working Well for TAP?
Molson Coors, one of the largest brewers in the world, is on track with its revitalization plan. The plan is focused on achieving sustainable top and bottom-line growth by streamlining the organization, and reinvesting resources into its brands and capabilities.
The company intends to invest in iconic brands and growth opportunities in the above-premium beer space. It also plans to develop digital competencies for employees, supply-chain-related system capabilities and commercial functions. As part of the plan, it has been expanding in adjacencies and beyond beer without hampering the support for its existing large brands.
The company is also building on the strength of its iconic core brands. Additionally, its cost-saving program announced in 2020 targets delivering cost savings of $600 million over three years.
Strength in Coors Light, Miller Lite and Coors Banquet resulted in total industry share growth in the United States, driven by brand positionings and better marketing. Molson Canadian and Carling beer in the U.K., and national champion brands witnessed significant market share gains.
Molson Coors is one of the largest brewers in the world and boasts a strong portfolio of well-established brands. The company remains committed to growing its market share through innovation and premiumization. With a view to accelerating portfolio premiumization, it has been aggressively growing its above-premium portfolio in the past few years.
The company highlighted that it is making efforts to change the shape of its product portfolio and expand in growth areas. Its U.S. above-premium portfolio witnessed sales that outpaced its U.S. economy portfolio, driven by rapid growth of its hard seltzers, the launch of Simply Spiked Lemonade, and the continued strength in Blue Moon and Peroni’s.
Hurdles to Counter
Molson Coors is reeling under cost inflation with respect to materials and manufacturing expenses and an unfavorable mix. Cost inflation drove 80% of the rise, stemming from higher material and manufacturing costs. This was partly offset by volume leverage and cost savings. In third-quarter 2023, underlying COGS per hectoliter rose 2.6% in constant currency.
Management anticipates the inflation impacts on COGS for the fourth quarter. Underlying depreciation and amortization are projected to be $690 million, plus or minus 5%. Underlying MG&A expenses are projected to be $100 million higher in the second half than the first half and up about 15% year over year. This will be driven by elevated marketing spend, which is likely to be up $100 million, coupled with increased people-related costs.
Stocks to Consider
Here, we have highlighted some better-ranked stocks from the broader Consumer Staples space, namely PepsiCo (PEP - Free Report) , Coca-Cola (KO - Free Report) and Sysco (SYY - Free Report) .
PepsiCo is one of the leading global food and beverage companies. Its complementary brands/businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. PEP has a trailing four-quarter earnings surprise of 5.6%, on average.
The Zacks Consensus Estimate for PepsiCo’s current financial-year sales and earnings suggests growth of 6.4% and 11.2%, respectively, from the year-ago period's reported figures. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Coca-Cola, a leading soft drink company, currently has a Zacks Rank #2. KO has a trailing four-quarter earnings surprise of 5.1%, on average.
The Zacks Consensus Estimate for Coca-Cola’s current financial-year sales and earnings suggests growth of 5.7% and 8.1%, respectively, from the year-ago period’s reported figures.
Sysco is a marketer and distributor of a range of food and related products primarily to the foodservice or food-away-from-home industry. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings per share suggests growth of 4.1% and 8%, respectively, from the year-ago period’s reported figures.
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Molson Coors (TAP) Surpasses Industry in a Year: What's Ahead?
Molson Coors Beverage Company (TAP - Free Report) is slated for growth, driven by brand strength, and strong performances across its portfolio and both business units. Additionally, the company is well-placed on the back of its revitalization plan and the premiumization of the global portfolio.
A strong portfolio performance, strength in both business units, and continued momentum in Coors Light and Miller Lite in the United States have been aiding TAP’s performance. Net sales grew 12.4% on a reported basis, while it rose 11% on a constant-currency basis, driven by a favorable price and sales mix, higher financial volume, and the positive impacts of foreign currency.
The company’s business trends and initiatives have been well-reflected in its share price. Shares of this Zacks Rank #3 (Hold) company have rallied 28.9% in the past year against the industry’s decline of 3.4%. TAP also fared better than the sector’s decline of 5.1% and the S&P 500’s growth of 22.5% in the same period.
Image Source: Zacks Investment Research
What’s Working Well for TAP?
Molson Coors, one of the largest brewers in the world, is on track with its revitalization plan. The plan is focused on achieving sustainable top and bottom-line growth by streamlining the organization, and reinvesting resources into its brands and capabilities.
The company intends to invest in iconic brands and growth opportunities in the above-premium beer space. It also plans to develop digital competencies for employees, supply-chain-related system capabilities and commercial functions. As part of the plan, it has been expanding in adjacencies and beyond beer without hampering the support for its existing large brands.
The company is also building on the strength of its iconic core brands. Additionally, its cost-saving program announced in 2020 targets delivering cost savings of $600 million over three years.
Strength in Coors Light, Miller Lite and Coors Banquet resulted in total industry share growth in the United States, driven by brand positionings and better marketing. Molson Canadian and Carling beer in the U.K., and national champion brands witnessed significant market share gains.
Molson Coors is one of the largest brewers in the world and boasts a strong portfolio of well-established brands. The company remains committed to growing its market share through innovation and premiumization. With a view to accelerating portfolio premiumization, it has been aggressively growing its above-premium portfolio in the past few years.
The company highlighted that it is making efforts to change the shape of its product portfolio and expand in growth areas. Its U.S. above-premium portfolio witnessed sales that outpaced its U.S. economy portfolio, driven by rapid growth of its hard seltzers, the launch of Simply Spiked Lemonade, and the continued strength in Blue Moon and Peroni’s.
Hurdles to Counter
Molson Coors is reeling under cost inflation with respect to materials and manufacturing expenses and an unfavorable mix. Cost inflation drove 80% of the rise, stemming from higher material and manufacturing costs. This was partly offset by volume leverage and cost savings. In third-quarter 2023, underlying COGS per hectoliter rose 2.6% in constant currency.
Management anticipates the inflation impacts on COGS for the fourth quarter. Underlying depreciation and amortization are projected to be $690 million, plus or minus 5%. Underlying MG&A expenses are projected to be $100 million higher in the second half than the first half and up about 15% year over year. This will be driven by elevated marketing spend, which is likely to be up $100 million, coupled with increased people-related costs.
Stocks to Consider
Here, we have highlighted some better-ranked stocks from the broader Consumer Staples space, namely PepsiCo (PEP - Free Report) , Coca-Cola (KO - Free Report) and Sysco (SYY - Free Report) .
PepsiCo is one of the leading global food and beverage companies. Its complementary brands/businesses include Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods. PEP has a trailing four-quarter earnings surprise of 5.6%, on average.
The Zacks Consensus Estimate for PepsiCo’s current financial-year sales and earnings suggests growth of 6.4% and 11.2%, respectively, from the year-ago period's reported figures. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Coca-Cola, a leading soft drink company, currently has a Zacks Rank #2. KO has a trailing four-quarter earnings surprise of 5.1%, on average.
The Zacks Consensus Estimate for Coca-Cola’s current financial-year sales and earnings suggests growth of 5.7% and 8.1%, respectively, from the year-ago period’s reported figures.
Sysco is a marketer and distributor of a range of food and related products primarily to the foodservice or food-away-from-home industry. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings per share suggests growth of 4.1% and 8%, respectively, from the year-ago period’s reported figures.