It has been about a month since the last earnings report for Molson Coors Brewing (TAP Quick QuoteTAP - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Molson Coors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Molson Coors Q1 Earnings & Sales Beat Estimates

Molson Coors posted impressive first-quarter 2024 results, wherein both bottom and top lines surpassed the Zacks Consensus Estimate. Also, both metrics improved year over year.

The company’s adjusted earnings of 95 cents per share increased 75.9% year over year and surpassed the Zacks Consensus Estimate of 71 cents.

Net sales grew 10.7% year over year to $2,596.4 million and beat the Zacks Consensus Estimate of $2,499 million. On a constant-currency basis, net sales rose 10.1%, driven by a positive price and sales mix, increased financial volumes, and the positive impacts of foreign currency.

Gross profit increased 25% year over year to $963.5 million. We note that the gross margin expanded 430 basis points (bps) to 37.1% in the quarter under review.

Segmental Information

Americas: Net sales in the segment increased 10.6% year over year to $2,145.4 million on both reported and constant-currency basis, driven by a positive price and sales mix, as well as higher financial volume. Financial volumes rose 7.5% year over year, driven by an increase in U.S. brand volumes stemming from higher volumes in the core brands, partly offset by lower contract brewing volume.

Brand volumes grew 5.3% year over year, with the United States seeing a 5.8% increase, primarily attributed to the expansion of core brands. Both Coors Light and Coors Banquet saw double-digit growth, whereas Miller Lite increased in the high-single digits. Canadian brand volumes rose 3.6%, fueled by growth in above-premium brands.

Net sales received a boost of 3.1% from the price and sales mix mainly due to increased net pricing and a favorable shift in sales mix, driven by reduced contract brewing volume in the United States. Underlying EBT improved 37.8% on a constant-currency basis to $321.1 million. The increase can be attributed to higher net pricing, rising financial volumes, a favorable sales mix and cost-saving initiatives, offset by cost inflation on materials and higher MG&A expenses.

EMEA&APAC: The segment’s net sales (on a reported basis) rose 10.9% year over year to $454.7 million and improved 8% on a constant-currency basis, driven by a favorable price and sales mix, and favorable currency, partly offset by a decline in financial volumes.

Financial volumes decreased 0.2% year over year due to lower volumes in Western Europe, impacted by challenges in the U.K. off-premise channel, partially offset by increased volumes in Central and Eastern Europe as inflation pressures ease for this market. Brand volumes increased 1.9% primarily due to increased volumes in Central and Eastern Europe as a result of easing inflationary pressures on consumers, partially offset by lower volumes in Western Europe.

The price and sales mix favorably impacted net sales by 8.2% primarily due to premiumization and increased net pricing to customers. The segment’s underlying EBT increased 28.4% year over year to $17.3 million on a constant-currency basis, driven by higher net pricing to customers and a favorable sales mix, partially offset by higher MG&A expenses.

Other Financial Updates

Molson Coors ended the first quarter with cash and cash equivalents of $458.4 million. As of Mar 31, 2023, the company had a total debt of $ 6.22 billion, resulting in a net debt of $5.76 billion.

Net cash provided by operating activities amounted to $25.4 million for the three months ending on Mar 31, 2024. The company's 2024 capital expenditure is estimated to be $750 million.

In the three months ending on Mar 31, 2024, the company repurchased 1,760,115 shares as part of the program approved on Sep 29, 2023.

Outlook

Management has issued a guidance for 2024. Net sales are projected to grow year over year in the low-single digits on a constant-currency basis. Underlying EBT is likely to grow in the mid-single digits on a constant-currency basis. Underlying earnings per share are likely to rise in the mid-single digits from that reported in 2023.

Underlying depreciation and amortization are projected to be $700 million, plus or minus 5%. The company expects an underlying effective tax rate of 23-25% for 2024. Consolidated net interest expenses are anticipated to be $210 million, plus or minus 5%. The underlying free cash flow is likely to be $1.2 billion, plus or minus 10%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

Currently, Molson Coors has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Molson Coors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.