MOLSON COORS CANADA INC. (Toronto symbols TPX.A $78 and TPX.B $78; Conservative Growth and Income Portfolios, Consumer sector; Shares outstanding: 184.8 million; Market cap: $14.4 billion; Price-to-sales ratio: 2.0; Dividend yield: 2.1%; TSINetwork Rating: Average; www.molsoncoors.com) is the world’s fifth-largest brewer.
In June 2012, Molson Coors paid $3.5 billion for StarBev, which owns nine breweries in central and eastern Europe (all amounts except share prices and market cap in U.S. dollars). The purchase has helped offset slower North American beer sales.
The company is also doing a good job of cutting StarBev’s costs and making it more efficient. In the three months ended March 31, 2014, Molson Coors’ earnings before one-time items jumped 115.2%, to $102.2 million from $47.5 million a year earlier. Per-share earnings rose 111.5%, to $0.55 from $0.26, on more shares outstanding.
Sales fell 1.5%, to $816.0 million from $828.5 million. If you exclude currency exchange rates, sales rose 0.3%, mainly due to gains in Europe, Latin America and Australia.
The stock is up over 30% in the past year, but it still trades at a reasonable 17.0 times the $4.23 a share the company should earn in 2014. The $1.48 dividend yields 2.1%.
The B shares have less voting power to elect directors than the A shares, but are more liquid and receive the same dividend.
Molson Coors B is a buy.
