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Why Molson Coors (TAP) is Marching Ahead of the Industry
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Molson Coors Beverage Company (TAP - Free Report) has been gaining from robust pricing actions, gains from a revitalization plan and premiumization of its global portfolio. Strength across its Coors Light and Miller Lite brands, as well as its beyond-beer approach, bodes well. The company remains on track with increased investments toward core brands and innovations.
This led to decent third-quarter 2022 results, wherein sales surpassed the Zacks Consensus Estimate and improved year over year. Net sales rose 4% to $2,935.2 million. On a constant-currency basis, net sales rose 7.9% due to positive pricing and a favorable sales mix stemming from portfolio premiumization, offset by a decline in financial volumes. Net sales per hectoliter increased 9.2% on a brand-volume basis, driven by strong net pricing and a favorable sales mix from portfolio premiumization.
Driven by these factors, management retained the 2022 view. Net sales are projected to grow in mid-single digits in constant currency. Underlying EBIT is likely to grow year over year in high-single digits in constant currency.
Image Source: Zacks Investment Research
Consequently, shares of this Zacks Rank #3 (Hold) stock have gained 16.5% year to date against the industry’s decline of 5.8%.
Key Growth Drivers
Molson Coors is 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. It intends to invest in iconic brands and growth opportunities in the above-premium beer space; expand in adjacencies and beyond beer, without hampering the support for its existing large brands; and create digital competencies for commercial functions, supply-chain-related system capabilities and employees.
To facilitate these investments, the company plans to generate savings of nearly $150 million by simplifying its structure. It is also building on the strength of its iconic core brands. Additionally, the company’s cost-savings program, announced in 2020, targets delivering cost savings of $600 million over three years.
The company remains focused on growing its market share through innovation and premiumization. To accelerate portfolio premiumization, the company has been aggressively growing its above-premium portfolio in the past few years. Molson Coors highlighted that it is making efforts to change the shape of its product portfolio and expand in growth areas.
The company’s U.S. above-premium portfolio witnessed sales that outpaced 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.
What’s Hurting Molson Coors?
Despite such strategic endeavors, TAP continues to witness lower brand and financial volume. In third-quarter 2022, Molson Coors’ worldwide brand and financial volumes fell 2% and 0.2%, respectively, due to sluggishness in the America segment, owing to lower Canada shipments and continued impacts of the Québec labor strike.
Molson Coors has been witnessing weakened consumer demand across the beer industry in its Central and Eastern European regions. This is mainly due to muted disposable income stemming from inflationary pressure. Management expects global inflationary pressures to remain a headwind. Also, the impacts of the Russia-Ukraine conflict and consumer inflationary pressures across Central and Eastern European countries remain concerning.
Conclusion
We believe that brand strength, product innovation, pricing actions, premiumization of its global portfolio and revitalization plan are likely to drive growth further for Molson Coors. Topping it, long-term growth of 3.9% and a VGM Score of B raise optimism in the stock.
Coca-Cola FEMSA currently flaunts a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 26% on average. It has a long-term earnings growth rate of 10.3%. The stock has gained 7.7% in the past three months.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings per share suggests growth of 15.6% and 6.2%, respectively, from the comparable year-ago reported numbers. The consensus mark for KOF’s earnings per share has moved up 9.8% in the past seven days.
e.l.f. Beauty currently sports a Zacks Rank of 1. ELF has a trailing four-quarter earnings surprise of 77%, on average. The stock has rallied 29% in the past three months.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and earnings suggests growth of 17.6% and 8.3%, respectively, from the corresponding prior-year reported numbers. The consensus mark for ELF’s earnings per share has moved up a penny in the past seven days.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8% on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.
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Why Molson Coors (TAP) is Marching Ahead of the Industry
Molson Coors Beverage Company (TAP - Free Report) has been gaining from robust pricing actions, gains from a revitalization plan and premiumization of its global portfolio. Strength across its Coors Light and Miller Lite brands, as well as its beyond-beer approach, bodes well. The company remains on track with increased investments toward core brands and innovations.
This led to decent third-quarter 2022 results, wherein sales surpassed the Zacks Consensus Estimate and improved year over year. Net sales rose 4% to $2,935.2 million. On a constant-currency basis, net sales rose 7.9% due to positive pricing and a favorable sales mix stemming from portfolio premiumization, offset by a decline in financial volumes. Net sales per hectoliter increased 9.2% on a brand-volume basis, driven by strong net pricing and a favorable sales mix from portfolio premiumization.
Driven by these factors, management retained the 2022 view. Net sales are projected to grow in mid-single digits in constant currency. Underlying EBIT is likely to grow year over year in high-single digits in constant currency.
Image Source: Zacks Investment Research
Consequently, shares of this Zacks Rank #3 (Hold) stock have gained 16.5% year to date against the industry’s decline of 5.8%.
Key Growth Drivers
Molson Coors is 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. It intends to invest in iconic brands and growth opportunities in the above-premium beer space; expand in adjacencies and beyond beer, without hampering the support for its existing large brands; and create digital competencies for commercial functions, supply-chain-related system capabilities and employees.
To facilitate these investments, the company plans to generate savings of nearly $150 million by simplifying its structure. It is also building on the strength of its iconic core brands. Additionally, the company’s cost-savings program, announced in 2020, targets delivering cost savings of $600 million over three years.
The company remains focused on growing its market share through innovation and premiumization. To accelerate portfolio premiumization, the company has been aggressively growing its above-premium portfolio in the past few years. Molson Coors highlighted that it is making efforts to change the shape of its product portfolio and expand in growth areas.
The company’s U.S. above-premium portfolio witnessed sales that outpaced 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.
What’s Hurting Molson Coors?
Despite such strategic endeavors, TAP continues to witness lower brand and financial volume. In third-quarter 2022, Molson Coors’ worldwide brand and financial volumes fell 2% and 0.2%, respectively, due to sluggishness in the America segment, owing to lower Canada shipments and continued impacts of the Québec labor strike.
Molson Coors has been witnessing weakened consumer demand across the beer industry in its Central and Eastern European regions. This is mainly due to muted disposable income stemming from inflationary pressure. Management expects global inflationary pressures to remain a headwind. Also, the impacts of the Russia-Ukraine conflict and consumer inflationary pressures across Central and Eastern European countries remain concerning.
Conclusion
We believe that brand strength, product innovation, pricing actions, premiumization of its global portfolio and revitalization plan are likely to drive growth further for Molson Coors. Topping it, long-term growth of 3.9% and a VGM Score of B raise optimism in the stock.
Stocks to Consider
Here are some better-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , e.l.f. Beauty (ELF - Free Report) and Conagra Brands (CAG - Free Report) .
Coca-Cola FEMSA currently flaunts a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 26% on average. It has a long-term earnings growth rate of 10.3%. The stock has gained 7.7% in the past three months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings per share suggests growth of 15.6% and 6.2%, respectively, from the comparable year-ago reported numbers. The consensus mark for KOF’s earnings per share has moved up 9.8% in the past seven days.
e.l.f. Beauty currently sports a Zacks Rank of 1. ELF has a trailing four-quarter earnings surprise of 77%, on average. The stock has rallied 29% in the past three months.
The Zacks Consensus Estimate for e.l.f. Beauty’s current financial-year sales and earnings suggests growth of 17.6% and 8.3%, respectively, from the corresponding prior-year reported numbers. The consensus mark for ELF’s earnings per share has moved up a penny in the past seven days.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8% on average.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.2% and 3.4%, respectively, from the corresponding year-ago reported figures.