Molson Coors Earnings: Good Process on Efficiency Gains but Lack of Premium Brands Still a Handicap

We don’t plan any material changes to our $70 fair value estimate for no-moat brewer Molson Coors after digesting its 2023 results, as sales growth of 9.4% and adjusted EPS of $5.43 edged our estimates of 9% and $5.34, respectively. While we give management credit for swift measures in 2023 to boost North America volume expansion as controversies affected main rival wide-moat Anheuser-Busch, in addition to steady efficiency gains in the past few years, we remain unenthused about the firm’s long-term outlook. This is given its reliance on commoditized midrange and economy beer segments and a lack of premium brands to capitalize on the consumption upgrade trends. As such, our 10-year projections for low-single-digit sales growth and low-teens average operating margins remain in place.