MOLSON COORS BREWING CO. $64 (New York symbol TAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 184.8 million; Market cap: $11.8 billion; Price-to-sales ratio: 2.9; Dividend yield: 2.3%; TSINetwork Rating: Average; www.molsoncoors.com) is the world’s fifth-largest brewer by volume.
Beer sales are rising slowly in developed regions like North America. That’s why Molson Coors bought StarBev, which owns nine breweries in central and eastern Europe, for $3.5 billion in June 2012.
The company continues to do a good job of cutting StarBev’s costs and making it more efficient.
As a result, Molson Coors’earnings before one-time items jumped 115.2% in the three months ended March 31, 2014, 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 gained 0.3%, mainly due to higher sales in Europe, Mexico, Latin America and Australia.
Molson Coors is using its rising earnings to pay down the extra debt it took on to buy StarBev. As of March 31, 2014, its long-term debt was $3.16 billion, or 27% of its market cap, down from $3.21 billion at the end of 2013.
The stock has gained 25% in the past year, but it still trades at a reasonable 15.1 times the $4.23 a share that the company should earn in 2014.
Molson Coors recently increased its dividend by 15.6%. The new annual rate of $1.48 yields 2.3%.
Molson Coors is a buy.
