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Bear of the Day: Molson Coors (TAP)

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Madeleine Johnson
·3 min read
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Molson Coors Beverage Company (TAP), previously known as Molson Coors Brewing Company, is a global manufacturer and seller of beer and other beverage products. It has an impressive and diverse portfolio of owned and partner brands like Blue Moon, Miller, Coors, Leinenkugel’s, Carling, among many others.

Q4 Earnings Recap

Shares of TAP slipped 5% after the company released its fourth quarter earnings results back in February; EPS, revenue, and EBITDA all missed the Street consensus.

Non-GAAP earnings fell to a loss of 40 cents per share.

Revenue fell 7.7% during Q4, mostly driven by financial volume declines, especially the steep 26.4% decrease of financial volumes in Europe. This was due to an unfavorable channel mix and on-premise restrictions in the U.K.

But, net sales in the U.S., which is Molson Coors’ largest market, increased 1.9%, which partially offset disappointing Europe and Canada results.

Bottom Line

TAP is now a Zacks Rank #5 (Strong Sell).

Six analysts have cut their full year earnings outlook over the past 60 days, and the consensus estimate has fallen 40 cents to $4.29 per share; earnings are expected to see a slight year-over-year decline for fiscal 2021, but TAP’s bottom line should be poised for a rebound in 2022.

Shares are up about 13.5% in the past one-year period compared to the S&P 500’s gain of 43.6%.

Molson Coors Beverage Company Price and Consensus
Molson Coors Beverage Company Price and Consensus

Looking ahead, Molson anticipates net sales revenue growth in the mid-single digits, with flat adjusted EBITDA growth.

Despite the hurdles the beverage giant faced last year, management is confident going forward. CEO Gavin Hattersley commented that Molson’s revitalization is working, setting the stage “to build our emerging growth division into a $1 billion revenue business by 2023.”

Investors who are interested in adding a beverage and alcohol stock to their portfolio could consider London-based Diageo Plc. (DEO). DEO is a #2 (Buy) on the Zacks Rank, with expected earnings growth of 11.8% for the current fiscal year.

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