Molson Coors Brewing Co Valuation – Initial Coverage $TAP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Molson Coors Brewing Co (TAP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Molson Coors Brewing Company (MCBC) is a holding company that operates as a brewer. The Company has a portfolio of brands, including Carling, Coors Light, Molson Canadian and Staropramen, as well as craft and specialty beers, such as Blue Moon, Creemore Springs, Cobra and Doom Bar. The Company operates through four segments: Molson Coors Canada (MCC or Canada segment); MillerCoors LLC (MillerCoors or U.S. segment); Molson Coors Europe (Europe segment), and Molson Coors International (MCI). Its Canada segment consists of production, marketing and sales of its brands, including core brands Coors Light and the Molson brand family, as well as Carling, Coors Banquet, Rickard’s and other owned and licensed brands in Canada. Its United States segment holds interest in MillerCoors, its joint venture with SABMiller for the United States operations. Its MCI segment includes Latin America, Asia, Europe and Australia.

TAP Chart

TAP data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[otw_shortcode_button href=”” size=”medium” icon_position=”left” shape=”square”]Learn More About Premium Membership[/otw_shortcode_button]


Downloadable PDF version of this valuation:

ModernGraham Valuation of TAP – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,238,569,323 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 76.88% Pass
6. Moderate PEmg Ratio PEmg < 20 18.77 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.90 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.53 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $5.41
MG Growth Estimate 10.65%
MG Value $161.24
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $78.47
MG Value based on 0% Growth $46.00
Market Implied Growth Rate 5.14%
Current Price $101.59
% of Intrinsic Value 63.01%

Molson Coors Brewing Co qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.17 in 2013 to an estimated $5.41 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.14% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Molson Coors Brewing Co revealed the company was trading above its Graham Number of $84.34. The company pays a dividend of $1.64 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 18.77, which was below the industry average of 28.57, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-73.82.

Molson Coors Brewing Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$73.82
Graham Number $84.34
PEmg 18.77
Current Ratio 0.69
PB Ratio 1.90
Current Dividend $1.64
Dividend Yield 1.61%
Number of Consecutive Years of Dividend Growth 0


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $2,169,600,000
Total Current Liabilities $3,157,500,000
Long-Term Debt $11,387,700,000
Total Assets $29,341,500,000
Intangible Assets $22,282,000,000
Total Liabilities $17,922,800,000
Shares Outstanding (Diluted Average) 213,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.95
Dec2016 $9.26
Dec2015 $1.93
Dec2014 $2.76
Dec2013 $3.08
Dec2012 $2.44
Dec2011 $3.63
Dec2010 $3.78
Dec2009 $3.87
Dec2008 $2.04
Dec2007 $2.71
Dec2006 $2.08
Dec2005 $0.84
Dec2004 $2.60
Dec2003 $2.39
Dec2002 $2.21
Dec2001 $1.66
Dec2000 $1.47
Dec1999 $1.23
Dec1998 $0.91
Dec1997 $1.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.41
Dec2016 $4.73
Dec2015 $2.56
Dec2014 $2.97
Dec2013 $3.17
Dec2012 $3.19
Dec2011 $3.44
Dec2010 $3.20
Dec2009 $2.71
Dec2008 $2.10
Dec2007 $2.13
Dec2006 $1.90
Dec2005 $1.85
Dec2004 $2.26
Dec2003 $1.99
Dec2002 $1.70
Dec2001 $1.38

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – November 2015
Molson Coors Brewing Co. Valuation – November 2015 Update $TAP
30 Companies in the Spotlight This Week – 11/15/14
Molson Coors Brewing Company Annual Valuation – 2014 $TAP
19 Companies in the Spotlight This Week – 8/9/14

Other ModernGraham posts about related companies

Constellation Brands Inc Valuation – February 2017 $STZ
Brown-Forman Corporation – February 2017 $BF.B
Boston Beer Company Inc Valuation – Initial Coverage $SAM
Constellation Brands Inc Valuation – August 2016 $STZ
Reynolds American Inc Valuation – July 2016 $RAI
Philip Morris International Inc Valuation – June 2016 $PM
Altria Group Inc Valuation – June 2016 $MO
Constellation Brands Inc Valuation – January 2016 Update $STZ
Molson Coors Brewing Co. Valuation – November 2015 Update $TAP
Brown-Forman Corporation Analysis – September 2015 Update $BF/B


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.