Molson Coors Beverage Company (TAP Quick QuoteTAP - Free Report) is well-placed for long-term growth, backed by its Revitalization plan and the premiumization of the global brand portfolio. The Revitalization plan is focused on achieving sustainable top-line growth by streamlining the organization and reinvesting resources into its brands and capabilities.

Molson Coors delivered against its revitalization plan on a global basis by increasing its dollar share in the United States in the second quarter of 2022 for the first time in over a decade. 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.

Additionally, the company’s cost-saving program announced in 2020 targets cost savings of $600 million over three years.

The Zacks Consensus Estimate for TAP’s current financial-year sales and earnings indicates growth of 1.1% and 4.6%, respectively, from the year-ago reported numbers.

What Places TAP Well?

Molson Coors is one of the largest brewers in the world and boasts a strong portfolio of well-established brands. The company has been committed to growing its market share through innovation and premiumization.

Intending to accelerate portfolio premiumization, TAP has aggressively grown its above-premium portfolio in the past few years. The company 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 successful launch of the Simply Spiked Lemonade, and the continued strength in Blue Moon and Peroni’s.

The company intends to invest in iconic brands and growth opportunities in the above-premium beer space’ expand in adjacencies and beyond beer without hampering the support for its existing large brands, and create digital competencies for commercial functions, supply-chain-related system capabilities and employees. It is also building on the strength of its iconic core brands.

Also, significant progress against the Acceleration Plan has been aiding Molson Coors’ performance. In first-quarter 2024, the strength of core power brands led to double-digit brand volume growth for Coors Light and Coors Banquet, high-single-digit brand volume growth for Miller Lite in the United States, and double-digit brand volume growth for Ozujsko in Croatia.

The above-premium portfolio, encompassing both beer and beyond beer, benefits from continued growth from successful innovations like Madri in the U.K., and Simply Spiked in the United States and Canada.

For 2024, net sales are projected to grow year-over-year in the low-single digits on a constant-currency basis. Underlying EBT is anticipated to increase in the mid-single digits on a constant-currency basis. Underlying earnings per share are expected to rise in the mid-single digits from that reported in 2023.

Factors Deterring Growth

Shares of the Zacks Rank #3 (Hold) company have lost 16.6% year to date compared with the industry’s 12% decline. The beverage company also compared unfavorably against the sector and S&P 500’s growth of 1.8% and 15.1%, respectively.

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The stock’s downside can be mainly attributed to pressures related to cost inflation concerning materials and manufacturing expenses, and an unfavorable mix. Additionally, higher marketing investments for supporting brands and innovations continue to hurt margins.

Management anticipates inflation impacts on COGS in the quarters ahead. For 2024, underlying depreciation and amortization are projected to be $700 million, plus or minus 5%. Consolidated net interest expenses are anticipated to be $210 million, plus or minus 5%.

Stocks to Consider

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely The Vita Coco Company Inc. (COCO Quick QuoteCOCO - Free Report) , Freshpet (FRPT Quick QuoteFRPT - Free Report) and Keurig Dr Pepper (KDP Quick QuoteKDP - Free Report) .

Vita Coco, a producer and marketer of coconut water products under the Vita Coco brand name, currently flaunts a Zacks Rank of 1 (Strong Buy). COCO has a trailing four-quarter earnings surprise of 25.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.5% and 40.5%, respectively, from the year-ago reported figures.

Freshpet is a pet food company, which manufactures and markets natural fresh foods, refrigerated meals, and treats for dogs and cats in the United States and Canada. It presently sports a Zacks Rank of 1.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates advancements of 24.8% and 177.1%, respectively, from the year-ago reported figures. It has a trailing four-quarter earnings surprise of 118.2%, on average.

Keurig is a beverage and coffee company in the United States and Canada. It currently carries a Zacks Rank #2 (Buy). KDP has a trailing four-quarter earnings surprise of 5.2%, on average.

The Zacks Consensus Estimate for Keurig’s current financial year’s sales and earnings suggests growth of 4.1% and 7.3%, respectively, from the year-ago reported numbers.