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Factors Likely to Impact Molson Coors' (TAP) Q3 Earnings

Molson Coors Brewing Co TAP is set to report third-quarter 2017 results before the opening bell on Nov 1.

Of late, the company has been focusing on strengthening its portfolio, especially in the beer category. The company has also been trying to expand its global footprint through acquisitions and agreements. These efforts are expected to positively impact the company’s top- and bottom-line performance in the upcoming quarterly results.

We note that the company’s earnings have missed the Zacks Consensus Estimate in three out of the trailing four quarters, resulting in an average negative surprise of 27.27%.

What to Expect?

Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for third quarter is currently pegged at $1.35 and has remained stable in the last seven days. Estimated earnings depict year-on-year growth of 31%. The bottom line is expected to benefit from the company’s ongoing cost-saving initiatives and synergies from the acquisition of its remaining stakes in MillerCoors.

Further, analysts polled by Zacks expect sales of $3,000 million, significantly higher than $948 million reported in the prior-year quarter. In the quarter under review, sales are expected to be driven by improved volumes across key market regions and in MillerCoors portfolio.

Molson Coors Brewing Company Price, Consensus and EPS Surprise

Factors at Play

In the United States, Molson Coors is expected to benefit from growth in its above-premium brands. Favorable pricing conditions are expected to positively impact the performance of the company in this region. Moreover, Molson Coors has been focusing on gaining share in the premium light segment in the United States through Coors Light and Miller Lite brands. In Europe, the company is expected to benefit from cost-saving initiatives. The Coors Light brand is also depicting strength in the region. Also, Molson Coors has been striving to strengthen its craft brewery in the European region.

Although the acquisition of the Miller global brands has boosted sales in Europe and international regions, volumes in Canada have been dismal in the past. Nevertheless, the company expects improved performance in this region by focusing on Coors Light and Molson Canadian brands.

In addition to improving its existing brands and minimizing costs, Molson Coors has also been venturing in newer product categories such as ready-to-drink beverages (both alcoholic and non-alcoholic).  These initiatives are expected to drive the company’s top-line performance and profits.

Nevertheless, we note that Molson Coors’ performance is expected to be affected by currency headwinds, as a major portion of its revenues come from outside the United States. Moreover, aging population across key markets and stiff competition has also been limiting performance. As a result, shares of the company have been underperforming the industry in the past six months. Molson Coors’ shares have declined 14.1% as against the industry’s rally of 12.6%.

What does the Zacks Model Unveil?

Our proven model does not conclusively show that Molson Coors is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Molson Coors carries a Zacks Rank #3, it has an Earnings ESP of -2.59%. We need to have a positive ESP to be confident about an earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combinations

Here are some companies which, according to our model, also have the right combination of elements to post earnings beat this quarter:

B&G Foods Inc BGS has an Earnings ESP of +4.17% and carries a Zacks Rank #2.

Pinnacle Foods Inc PF has an Earnings ESP of +1.36% and carries a Zacks Rank #2.

United Natural Foods, Inc UNFI has an Earnings ESP of +6.33% and carries a Zacks Rank #2.

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Molson Coors Brewing Company (TAP): Free Stock Analysis Report
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