Can Pricing Aid Molson Coors' (TAP) Q3 Earnings Amid Inflation?
Molson Coors Beverage Company TAP is expected to register top and bottom-line growth when it reports third-quarter 2023 earnings on Nov 2. The Zacks Consensus Estimate for the company’s third-quarter revenues is pegged at $3.2 billion, suggesting 10.5% growth from the prior-year period’s reported figure.
The consensus mark for earnings has moved up by a penny in the past seven days to $1.53 per share. It suggests an increase of 15.9% from the year-ago reported figure.
In the last reported quarter, this leading alcohol company delivered an earnings surprise of 9.2%. It recorded an earnings surprise of 34.2%, on average, in the trailing four quarters.
Molson Coors Beverage Company Price and EPS Surprise
Molson Coors Beverage Company price-eps-surprise | Molson Coors Beverage Company Quote
Key Factors to Note
Molson Coors has been benefiting from strength in core brands, as well as strong market share through innovation and premiumization. Strength in core brands, including Coors Light, Miller Lite and Coors Banquet, drove industry share growth in the United States. Molson Canadian and Carling beer in the U.K., and national champion brands have been witnessing significant market share gains. These are expected to have boosted volumes in the to-be-reported quarter.
Additionally, the company’s third-quarter top line is expected to benefit from its pricing actions, which have been undertaken to overcome the inflationary environment.
Our model estimates an 8.7% gain from pricing and a 0.4% increase in volume/mix in the third quarter, offset by a 1% adverse currency headwind.
The company has highlighted that it has been making efforts to change the shape of its product portfolio and expand in growth areas. Its U.S. above-premium portfolio is likely to have witnessed sales growth outpacing its U.S. economy portfolio, driven by the rapid growth of its hard seltzers, the successful launch of Simply Spiked Lemonade and the continued strength in Blue Moon and Peroni’s.
TAP has been on track with its revitalization plan focused on achieving sustainable top-line growth by streamlining the organization and reinvesting resources into its brands and capabilities. As part of this plan, it has been investing in iconic brands and growth opportunities in the above-premium beer space, expanding in adjacencies and beyond beer, and creating digital competencies for commercial functions, supply-chain-related system capabilities and employees.
These investments are expected to have been reflected in Molson Coors’ third-quarter top line. Also, the company’s cost-saving program has been one of the key growth drivers.
We estimate the adjusted gross profit to increase 9.4% year over year in the third quarter, with a 50 bps expansion in the gross margin to 37.4%. The gross margin is likely to have benefited from the easing of supply-chain headwinds, offset by the ongoing inflationary commodity pressures.
However, Molson Coors has been witnessing lower brand and financial volume. Inflationary pressures are likely to have been other headwinds.
Our model predicts total brand and financial volumes to increase 0.4% each in the to-be-reported quarter. Our model predicts marketing, general and administrative expenses, as a percentage of sales, to increase 50 bps year over year to 23% in the third quarter. We anticipate the adjusted operating income to remain flat with last year at 14.5%.
TAP has been witnessing weakened consumer demand across the beer industry. This is mainly due to pricing actions. On its last reported quarter’s earnings call, management expected global inflationary pressures to remain a headwind.
Zacks Model
Our proven model does not conclusively predict 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 odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Molson Coors has an Earnings ESP of -0.41% and a Zacks Rank of 3, at present.
Stocks With the Favorable Combination
Here are three companies, which according to our model, have the right combination of elements to post an earnings beat:
TreeHouse Foods THS currently has an Earnings ESP of +9.47% and sports a Zacks Rank of 1. The company is expected to register year-over-year top and bottom-line growth when it reports third-quarter 2023 results. The Zacks Consensus Estimate for TreeHouse’s quarterly revenues is pegged at $954.5 million, calling for growth of 9.1% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for THS’ quarterly earnings per share (EPS) is pegged at 48 cents, indicating an improvement of 166.7% from the year-ago quarter. TreeHouse had an earnings surprise of 31.4% in the last reported quarter.
Church & Dwight Co. CHD currently has an Earnings ESP of +2.21% and a Zacks Rank of 3. The company’s top line is expected to increase year over year when it reports third-quarter results. The Zacks Consensus Estimate for CHD’s quarterly revenues is pegged at $1.43 billion, suggesting a rise of 8.7% from the figure reported in the prior-year quarter.
The consensus estimate for Church & Dwight’s quarterly EPS is pegged at 68 cents, which indicates a 10.5% decline from the year-ago reported figure. CHD has a trailing four-quarter earnings surprise of 12.1%, on average.
Monster Beverage MNST currently has an Earnings ESP of +1.98% and a Zacks Rank of 3. MNST is likely to register year-over-year top and bottom-line growth when it reports the third-quarter 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.86 billion, which suggests growth of 14.7% from the figure reported in the prior-year quarter.
The consensus estimate for Monster Beverage’s quarterly earnings is pegged at 40 cents per share, suggesting an increase of 33.3% from the year-ago quarter’s reported number. MNST has delivered an earnings beat of 2.2%, on average, in the trailing four quarters.
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Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
Monster Beverage Corporation (MNST) : Free Stock Analysis Report
