uploads/2016/10/tap-pm.png

Goldman Sachs, Bank of America Merrill Lynch Upgrade Molson Coors

By

Updated

Price movement

Molson Coors Brewing (TAP) has a market cap of $23.6 billion. It rose 2.0% to close at $109.83 per share on October 10, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 1.1%, 8.4%, and 18.5%, respectively, on the same day.

TAP is trading 3.8% above its 20-day moving average, 6.8% above its 50-day moving average, and 14.3% above its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The iShares Dow Jones US Consumer Goods Sector Index ETF (IYK) invests 0.82% of its holdings in Molson Coors Brewing. The ETF tracks a market cap–weighted index of stocks in the US consumer goods sector. The YTD price movement of IYK was 5.6% on October 10.

The market caps of TAP’s competitors are as follows:

  • Anheuser-Busch InBev SA-ADR (BUD): $205.8 billion
  • Constellation Brands (STZ): $34.8 billion

Molson Coors Brewing’s rating

On October 10, 2016, Goldman Sachs initiated the coverage of Molson Coors Brewing with a “buy” rating and also set the stock’s price target at $130.00 per share.

TheStreet reported, “The resumed rating comes after the completion of the company’s full acquisition of the MillerCoors US joint venture and global rights to the Miller brand.”

The report added, “Goldman sees the deal as transformative for Molson Coors. The firm also projects solid 10% or more earnings per share CAGR (compound annual growth rate) driven by sizable margin gains, strong cash generation and stable top-line growth.”

Bank of America Merrill Lynch initiated its coverage of Molson Coors Brewing (TAP) with a “buy” rating and set the stock’s price target at $140.00 per share.

Performance of Molson Coors Brewing in 2Q16

Molson Coors (TAP) reported 2Q16 net sales of $986.2 million, a fall of 1.9% compared to net sales of ~$1.0 billion in 2Q15. The company’s gross profit margin rose 1.5%, and its operating income fell 14.8% in 2Q16 compared to 2Q15.

The company’s net income and EPS (earnings per share) fell to $172.3 million and $0.80, respectively, in 2Q16 compared to $229.0 million and $1.23, respectively, in 2Q15. It reported non-GAAP EBITDA[1. earnings before interest, tax, depreciation, and amortization] of $428.7 million in 2Q16, a fall of 5.8% compared to 2Q15.

TAP’s net accounts receivable and total inventories rose 32.6% and 30.6%, respectively, in 2Q16 compared to 4Q15. It reported cash and cash equivalents of $3.0 billion in 2Q16 compared to $430.9 million in 4Q15.

Molson Coors’s current ratio rose to 2.4x, and its debt-to-equity ratio fell to 0.55x in 2Q16 compared to a current ratio and a debt-to-equity ratio of 1.0x and 0.74x, respectively, in 4Q15.

Next, we’ll look at Apple (AAPL).

Advertisement

More From Market Realist