Molson Coors continues to raise its dividends. However, its shares will likely remain in a narrow range as the company copes with changing consumer tastes and increasingly strong competition.
While the company’s cost-cutting initiatives have contributed to a 7.9% earnings increase, we feel it’s prudent to wait and see if these efficiency gains are sustainable in the long term. The full impact of these measures on the company’s bottom line and ability to navigate industry headwinds is yet to be determined.
Meanwhile, the stock performance remains poor – it’s up only slightly over the last five years – and it appears to offer only modest growth going forward.
MOLSON COORS CANADA INC. (Toronto symbols TPX.A and TPX.B; www.molsoncoors.com) is the world’s fifth-largest beer brewer. Its main brands include Molson Canadian (Canada), Coors Light (the U.S.) and Carling (the U.K.).
Molson recently agreed to sell four craft breweries—Hop Valley Brewing Company, Terrapin Beer Co., Revolver Brewing, and Atwater Brewery—to Tilray Brands (Toronto symbol TLRY). The move allows Molson to focus on larger brands such as Blue Moon and Peroni. The company has not yet announced the selling price.
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Value Stocks: Molson Coors’ steady dividend growth provides income stability
Meantime, in the quarter ended June 30, 2024, revenue fell 0.4%, to $3.25 billion from $3.27 billion a year earlier (all figures except share prices in U.S. dollars). Excluding currency exchange rates, sales decreased 0.1% as lower volumes offset higher prices. Stronger demand in Europe and Asia offset weaker sales in the Americas.
If you factor out one-time items, earnings rose 7.9%, to $1.92 a share (or a total of $404.2 million) from $1.78 a share (or $387.2 million) with a cost-cutting plan.
Molson will probably earn $5.83 U.S. a share in 2025, and the class B shares trade at just 9.5 times that estimate. Meanwhile, the company faces increasingly intense competition from larger brewers such as Anheuser-Busch InBev (New York symbol BUD).
Earlier this year, raised your quarterly dividend with the March 2024 payment by 7.3%, to $0.44 U.S. a share from $0.41 U.S. The $1.76 dividend yields 3.1%.
Recommendation in The Successful Investor: Molson Coors Canada Inc. is a hold.
