Yahoo Finance Molson Coors (TAP) Down 4.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Molson Coors Brewing (TAP). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Molson Coors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Molson Coors’ Q1 Earnings & Sales Beat Estimates
Molson Coors reported first-quarter 2023 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and improved year over year. Results gained from strength in core brands, as well as the above premium portfolio and contributions from its Revitalization Plan.
Quarterly Details
The company’s adjusted earnings of 54 cents per share surged 86.2% year over year and surpassed the Zacks Consensus Estimate of 26 cents and our estimate of 22 cents.
Net sales grew 5.9% to $2,346.3 million and beat the Zacks Consensus Estimate of $2,230 million and our estimate of $2,217 million. On a constant-currency basis, net sales rose 8.2%, driven by favorable price and sales mix, which was offset by a slight decline in financial volume.
Net sales per hectoliter increased 6.1% on a reported basis and 8.4% on a constant currency basis, driven by strong net pricing, and a favorable sales mix stemming from premiumization.
Molson Coors’ worldwide brand volumes fell 2.1% to 16.2 million due to sluggishness in America, as well as in EMEA&APAC. Financial volumes declined 0.2% to 17 million hectoliters due to lower volumes in the Americas, partly offset by increased EMEA&APAC volumes.
Underlying (non-GAAP) earnings before income taxes (EBT) advanced 89% year over year to $157.8 million. On a constant-currency basis, EBT surged 82.8% owing to higher net pricing and a positive sales mix, somewhat offset by cost inflation related to materials, conversion and energy costs.
Segmental Information
Molson Coors operates under the following geographical segments.
Americas: Net sales in the segment increased 5.6% to $1,939 million on a reported basis and rose 6.5% on a constant-currency basis, driven by price and sales mix, offset by a decline in financial volume. Financial volumes dipped 0.5% year over year due to industry softness, lower Latin America financial volumes and weak contract volumes, offset by higher U.S. domestic shipments.
Brand volume for the segment dropped 1.5% on a 1.2% decline in the United States, owing to softer industry performance and lower economy portfolio volumes. Canada brand volumes rose 4.9% due to growth in core brands and partly due to cycling softer on-premise performance in the prior year. Meanwhile, Latin America declined 12.4% due to industry softness in some of the major markets.
Net sales per hectoliter rose 6.1% due to a favorable sales mix and higher net pricing, offset by currency woes. Underlying EBT improved 37.7% on a constant-currency basis to $233.9 million. The increase can be attributed to higher pricing and a favorable sales mix, offset by cost inflation on materials, conversion and energy costs.
EMEA&APAC: The segment’s net sales (on a reported basis) grew 7.6% to $410.1 million and improved 16.1% on a constant-currency basis, driven by favorable price and sales mix, and an increase in financial volume. Net sales per hectoliter for the segment advanced 6.7%, resulting from a favorable sales mix, as well as higher pricing offset by currency headwinds. The segment’s financial volumes rose 0.8% due to growth in the above-premium volumes in the U.K. and higher factored volumes offset by inflationary pressures. Brand volume decreased 3.9% due to volume declines resulting from the Russia-Ukraine conflict and inflationary pressures, somewhat offset by growth in Western Europe.
The segment’s underlying EBT increased 30% to a loss of $21.8 million on a reported basis and improved 28% on a constant-currency basis, driven by higher net pricing to customers, favorable sales mix and higher financial volumes, which offset cost inflation, particularly in materials, transportation and energy costs, as well as higher MG&A spend.
Other Financial Updates
Molson Coors ended the first quarter with cash and cash equivalents of $328.2 million. At the end of first-quarter 2023, the company had a total debt of $6,590.4 million, resulting in net debt of $6,262.2 million.
As of Mar 31, 2022, the company provided $3.4 million in cash by operating activities, resulting in an underlying free cash flow of $173.7 million. For 2023, capital expenditure is likely to be $700 million, plus or minus 5%. In the quarter under review, the company declared and paid out cash dividends of 41 cents per share, with the CAD equivalent totaling 0.55 per share. As of Mar 31, 2022, TAP repurchased 275,000 shares for $14,6 million.
Outlook
Management retained the 2023 view. Net sales are projected to grow year over year in the low-single digits on a constant-currency basis. Underlying EBT is likely to grow year over year in the low-single digits on a constant-currency basis. Underlying depreciation and amortization are projected to be $690 million, plus or minus 5%. The company expects an underlying effective tax rate of 21-23%. Consolidated net interest expenses are anticipated to be $240 million, plus or minus 5%. Underlying free cash flow is likely to be $1 billion, plus or minus 10%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 10.08% due to these changes.
VGM Scores
Currently, Molson Coors has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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.
Performance of an Industry Player
Molson Coors belongs to the Zacks Beverages - Alcohol industry. Another stock from the same industry, Boston Beer (SAM), has gained 10.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Boston Beer reported revenues of $410 million in the last reported quarter, representing a year-over-year change of -10.3%. EPS of -$0.73 for the same period compares with -$0.16 a year ago.
For the current quarter, Boston Beer is expected to post earnings of $3.46 per share, indicating a change of -19.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.5% over the last 30 days.
Boston Beer has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
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