Valuation Scorecard: Stock Rating C-Neutral (4/10/24)-Molson Coors Beverage Company (TAP).

What is the market’s view of Molson Coors Beverage’s future operating performance as reflected in the current price of $67? Molson Coors Beverage’s common shares will need to reach $113 to achieve average annual stock market performance of 9.0% over the next 6 years. Molson Coors Beverage’s stock price will need to reach $133 by 2029 to achieve upper quartile performance.

Executive Summary

• Molson Coors Beverage’s important characteristics: high profitability, above average financial strength, instability, and very low expected growth. A big positive influence on Molson Coors Beverage’s valuation is its superior Risk Profile.
• Very low valuation, above market shareholder returns. Current valuation levels are very low relative to the Molson Coors Beverage Peer Group. Recent market returns have outperformed the Molson Coors Beverage Peer Group. Total shareholder returns expected to seriously beat the overall equity market. Based on current investor expectations, Molson Coors Beverage shares should reach a level of $120 by 2029 — an 12.1% per year total shareholder return. A 2029 stock price of $113 would reflect median performance and a price of $133 would be required to reach upper quartile performance.
• Molson Coors Beverage’s achieved growth is slightly below average. Historical growth has been below average relative to the Molson Coors Beverage Peer Group and forecasted growth is relatively very low. Asset Growth has lagged. This factor has negatively affected market perceptions of Molson Coors Beverage. Molson Coors Beverage’s historical income statement growth and balance sheet growth have diverged. Revenue growth has exceeded asset growth; earnings growth has paralleled equity growth and return on equity has been stable. Molson Coors Beverage’s consensus growth expectations are in line with past growth.
• Asset Turnover is group leading. This factor has strengthened market perceptions of Molson Coors Beverage. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
• Risk Profile has been Molson Coors Beverage’s biggest valuation strength. Molson Coors Beverage’s risk profile is very favorable. Overall variability has been very low with very low revenue variability, very high E.P.S. variability, and relatively low stock price volatility. Financial Strength is only average and earnings’ expectations are relatively very high. The debt/capital ratio has declined very significantly.

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