Molson Coors Beverage Company (TAP) currently holds a market capitalization of $11 billion. Based in Golden, Colorado, the company produces and sells beer and various malt beverage products under multiple brands. Its offerings also include flavored malt beverages, such as hard seltzers, craft beverages, spirits, energy drinks, and ready-to-drink options.
TAP’s Stock Underperforms Compared to Market
Over the past 52 weeks, shares of Molson Coors have noticeably underperformed compared to the broader market. TAP’s stock declined 13.9%, while the S&P 500 Index ($SPX) increased by 20.5%. Year-to-date, TAP’s stock is down 6.8%, contrasting with SPX’s gain of 2.9%.
Comparison with Consumer Staples
When looking at the Consumer Staples Select Sector SPDR Fund (XLP), TAP’s performance is even less impressive. The fund returned 9.4% over the last 52 weeks and 2.5% year-to-date, outpacing Molson Coors.
Mixed Earnings Report Highlights Challenges
On November 7, shares rose slightly following the release of a mixed Q3 earnings report. The company posted adjusted earnings of $1.80 per share, a decrease of 6.2% from the same quarter last year. However, this exceeded estimates by 9.1%. Revenue fell by 7.9% year-over-year to $3 billion, falling short of Wall Street expectations by 3%.
This revenue shortfall was mainly due to a 12.3% drop in financial volumes attributed to lower shipments and reduced contract brewing in the Americas, as market conditions in the U.S. remained challenging.
Future Outlook and Analyst Ratings
Despite ongoing challenges, Molson Coors has reaffirmed its underlying earnings before tax (EBT) outlook for 2024, expecting improvements in costs related to packaging, transportation, and administrative expenses. Yet, the company has revised its 2024 sales forecast, now predicting a 1% decline on a constant-currency basis instead of earlier estimates of low-single-digit growth.
For the fiscal year ending in December, analysts project TAP’s earnings per share to grow by 6.6% year-over-year to reach $5.79. Notably, TAP has consistently surpassed Wall Street expectations in the last four quarters.
Among the 20 analysts monitoring TAP, the consensus rating is “Moderate Buy,” which includes five “Strong Buy” recommendations, one “Moderate Buy,” 13 “Hold,” and one “Strong Sell” rating. This slightly improved outlook represents a change from three months prior, where only four analysts advised a “Strong Buy.”
On February 5, Citi analyst Filippo Falorni upgraded TAP’s rating to “Neutral,” raising its price target to $57, signifying a potential upside of 6.7%. The average price target is $62.23, indicating a 16.4% upside from current price levels, while the highest target of $75 suggests a potential upside of 40.3%.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please review the Barchart Disclosure Policy here.
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