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Molson Coors Beverage Co B TAP

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Morningstar’s Analysis

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Economic Moat




Strong Q3 Performance at Molson Coors; Uphill Climb Ahead, but Value Will Reveal Itself Over Time

Analyst Note

| Nicholas Johnson, CFA |

Shares of no-moat Molson Coors have fared the worst of its brewing peer group, missing out entirely on the post-March rally (in fact, shares are trading a smidge below where they were back then). With COVID-19 cases rising across Europe and the U.S., we believe investors were bracing for the worst heading into its third-quarter release. The results were good (ahead of CapIQ consensus on both the top and bottom lines), but the market remains wary nevertheless (shares barely moved on the news). We’re not changing our $55 fair value estimate, and our view is that the stock has been bid down to obscenely cheap levels, implying worse-than-mediocre long-term outcomes. While the turnaround will take time, we remain adamant that the story is not a hopeless one.

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Company Profile

Business Description

Molson Coors is the fifth- largest beer producer globally, boasting top-two positioning in the U.S., Canada, and many Central European markets. It brews and markets a slew of company-owned brands including Blue Moon, Coors, Miller Lite, Carling, and Staropramen. It also sells various partner brands in certain locales such as Amstel and Dos Equis in Canada (through an exclusive import/license arrangement with Heineken) and Corona in Central Europe (through an agreement with Anheuser-Busch InBev). The firm's go-to-market approach differs by geography as well, primarily using independent distributors in the U.S., but deploying hybrid models in Canada and Europe.

1801 California Street, Suite 4600
Denver, CO, 80202
T +1 303 927-2337
Sector Consumer Defensive
Industry Beverages - Brewers
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 17,700