Valued at $12.4 billion by market cap, Molson Coors Beverage Company (TAP) is a leading global brewer specializing in the production, marketing, and distribution of beer and other beverages. Based in Golden, Colorado, the company offers a diverse portfolio of iconic and innovative brands, catering to a wide range of consumers, retailers, and distributors worldwide.
Shares of this brewing giant have lagged behind the broader market over the past year. Over the past 52 weeks, the stock gained 1.4% compared to the S&P 500 Index’s ($SPX) 31.1% returns. In 2024, TAP is down 1.2% versus SPX’s 24.7% gains on a YTD basis.
Narrowing the focus, TAP has also underperformed the Invesco Food & Beverage ETF (PBJ). The exchange-traded fund has gained 10.4% over the past 52 weeks and 4.7% on a YTD basis.
On Nov. 7, Molson Coors’ shares gained slightly after the company reported mixed Q3 earnings. Revenue came in at $3.04 billion, missing analyst expectations of $3.13 billion and declining 7.8% year over year. However, non-GAAP EPS of $1.80 exceeded consensus estimates by 7.9%.
Despite this earnings beat, the results highlighted ongoing challenges, including a drop in gross margin to 39.5% from 40.8%, a decline in operating margin to 14.8% from 18%, and a decrease in free cash flow margin to 11.5% from 16.8%. Sales volumes also fell significantly by 12.3% year-over-year, reflecting persistent headwinds in demand and operational efficiency.
Molson Coors revised its 2024 guidance, citing a 1% decline in net sales due to softness in the U.S. beer industry during the peak season while maintaining expectations for mid-single-digit growth in earnings and narrowing EPS targets despite inflationary pressures and contract brewing volume headwinds.
For the current fiscal year, ending in December, analysts expect Molson Coors’ EPS to grow 6.5% to $5.78 on a diluted basis. The company’s earnings surprise history is robust. It beat the consensus estimate in each of the last four quarters.
Among the 17 analysts covering TAP stock, the consensus is a “Hold” overall. That’s based on four “Strong Buy” ratings, 11 “Holds,” and two “Strong Sells.”
This configuration is more bullish than a month ago, with three analysts suggesting a “Strong Buy.”
On Nov. 8, J.P. Morgan (JPM) analyst Andrea Faria Teixeira maintained a “Hold” rating on Molson Coors Beverage, with a price target of $59, implying that the stock trades at a premium.
The mean price target of $61.32 represents a 1.4% premium compared to TAP’s current price levels. The Street-high price target of $75 suggests an upside potential of 24%.
