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Factors Likely to Decide Molson Coors' (TAP) Fate in Q3 Earnings

Zacks Equity Research

Molson Coors Brewing Company TAP is slated to release third-quarter 2019 results on Oct 30. This leading alcohol company has witnessed dismal performance in the last few quarters. The company’s bottom line missed estimates in the last two quarters and its sales lagged the same in the last three quarters. Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Dull Estimates

The Zacks Consensus Estimate for third-quarter earnings has moved down by a penny in the past 30 days to $1.46, which suggests a decline of 20.7% from the year-ago quarter’s reported figure.

Molson Coors Brewing Company Price and EPS Surprise

 

Molson Coors Brewing Company Price and EPS Surprise

Molson Coors Brewing Company price-eps-surprise | Molson Coors Brewing Company Quote

 

For revenues, the consensus estimate stands at $2.86 million that suggests a decline of approximately 2.5% from the year-ago quarter’s figure.

Factors at Play

Ongoing turmoil in the alcohol space, resulting from consumers’ shift to healthy drinks, is particularly hurting the beer makers and Molson Coors is no exception. Clearly, the company has been grappling with weak beer volume in the United States. Soft volume trends, adverse currency movements, higher marketing expenses and cost inflation are likely to have made an impact on the company’s top- and bottom-line performance in the third quarter.

The Zacks Consensus Estimate for the company’s sales in the third quarter for the United States, Europe, International and Canada stands at $1,926 million, $549 million, $62 million and $373 million, respectively. This suggests declines of 0.5%, 5.1%, 7.5% and 4.1%, respectively, on a year-over-year basis.

In the last earning call, management stated that higher input costs, volume deleverage and increased packaging expenses will impact cost of goods sold per hectoliter in the second half of 2019. These are likely to get reflected on margins, and in turn the bottom line.

Nonetheless, the company has been undertaking global pricing and cost saving initiatives to offset the aforementioned woes. Moreover, innovations coupled with premiumization efforts are helping the company to regain lost ground.

What Does Zacks Model Say
 
Our proven model predicts an earnings beat for Molson Coors this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Molson Coors has a Zacks Rank #3 and an Earnings ESP of +4.56%.

Other Stocks With Favorable Combination

Here are other companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:

The Boston Beer Company Inc SAM has an Earnings ESP of +7.04% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Church & Dwight Co., Inc CHD currently has an Earnings ESP of +0.93% and a Zacks Rank #2.

Altria Group, Inc MO presently has an Earnings ESP of +1.75% and a Zacks Rank #3.

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Molson Coors Brewing Company (TAP) : Free Stock Analysis Report
 
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
 
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