Molson Coors Earnings: Profit Growth Led by Improving Volumes, but Soft Consumer Backdrop a Concern

We plan to maintain our $70 fair value estimate for no-moat Molson Coors after digesting its first-quarter results. Sales increased 10% in constant currency thanks to volume rebounds, while adjusted earnings per share expanded 75% on volume leverage, cost savings, and a lower tax rate (21% versus 29% a year ago). While we think management deserves credit for stepping up innovation and marketing in the US and focusing more on the on-premises channel in Europe, we expect a distressed consumer and intensifying competition to weigh on the brewer’s outlook. We maintain our 2024 estimates for increases of 1% in sales and 4% in adjusted EPS, which align with management’s unchanged outlook for a low-single-digit sales growth and a mid-single-digit adjusted EPS increase. Our 10-year projection for low-single-digit sales growth and low-teens average operating margins remain in place.