Core Viewpoint - Molson Coors Beverage Company (TAP) has outperformed the industry and broader market due to its focus on premiumization, innovation, and brand revitalization, resulting in a stock price increase of 10.8% over the past three months compared to the industry's 5.2% growth [1]. Stock Performance - TAP stock closed at $61.58, approaching its 52-week high of $69.18, raising investor interest regarding future growth potential [3]. - The stock is trading above its 50-day and 200-day simple moving averages of $58.02 and $55.42, respectively, indicating a continued uptrend and positive market sentiment [4]. Growth Strategy - The company is committed to growing its market share through premiumization and innovation, focusing on its above-premium portfolio [6][9]. - Core brands like Coors Light and Miller Lite have maintained strong market share gains in the U.S., with Coors Banquet showing impressive growth [10]. - In Canada, Coors Light remains the leading light beer, while the Molson family of brands has seen sustained share growth [10]. - The company is implementing targeted expansion plans in the U.S. and has seen success in the U.K. and EMEA/APAC regions through premiumization efforts [11]. Financial Projections - For 2025, the company expects sales growth in the low single digits, with underlying earnings per share (EPS) rising in the high single digits and operating profit growing in the mid-single digits [13]. - Planned price increases of 1-2% in North America and adjustments in other markets are anticipated to contribute to margin expansion [13]. - The company has retained a significant portion of its share gains and is focused on premiumization across its portfolio [14]. Investment Rationale - Molson Coors' strategic focus on premiumization, strong brand positioning, and expansion into non-alcoholic beverages positions it for sustained growth [16]. - The company is expected to benefit from continued pricing power and operational improvements, making it a compelling investment opportunity [16].

Core Insights - Investing in "sin stocks," which include companies in alcohol, tobacco, and gambling, has historically provided attractive returns despite ethical concerns due to strong cash flows and loyal customer bases [1][7] Industry Overview - Sin stocks tend to perform well in both economic booms and downturns, benefiting from stable demand, strong pricing power, and consistent dividend payouts [2] - The U.S. alcoholic beverages market is projected to grow from $543.13 billion in 2024 to $806.44 billion by 2033, with a CAGR of 4.99% [4] - The global tobacco market is expected to grow from $899.9 billion in 2024 to $1,157.8 billion by 2032, achieving a CAGR of 3.2% from 2025 to 2032 [5] - The North America online gambling market was valued at $16.56 billion in 2024 and is projected to expand at a CAGR of 12.2% from 2025 to 2030 [6] Company Highlights - Altria Group (MO) dominates the tobacco industry with strong dividends due to its market presence and pricing strategy [3] - Las Vegas Sands (LVS) is positioned as a leader in the gambling sector, benefiting from the acceleration of sports betting legalization and online gaming expansion [3] - Molson Coors Beverage Company (TAP) is transforming its business to align with evolving consumer preferences, focusing on premiumization and innovation [9][10] - Wynn Resorts (WYNN) is enhancing its luxury hospitality offerings and expanding into high-growth markets, including a significant project in the UAE [12][13] - Philip Morris International Inc. (PM) is leading the industry toward a smoke-free future by expanding its smoke-free product portfolio and maintaining strong financial performance [15][16]

Core Viewpoint - Molson Coors Brewing (TAP) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - For the fiscal year ending December 2025, Molson Coors is projected to earn $6.33 per share, reflecting a 6.2% increase from the previous year, with a 6% rise in the Zacks Consensus Estimate over the past three months [8]. Zacks Rating System - The Zacks Rank stock-rating system categorizes stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Molson Coors to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for near-term price appreciation [10].

Company Overview - Molson Coors Brewing (TAP) is located in Golden and operates within the Consumer Staples sector, with a year-to-date share price change of 3.4% [3] - The company currently pays a dividend of $0.47 per share, resulting in a dividend yield of 3.17%, which is significantly higher than the Beverages - Alcohol industry's yield of 0.52% and the S&P 500's yield of 1.58% [3] Dividend Performance - The annualized dividend of Molson Coors Brewing is $1.88, reflecting a 6.8% increase from the previous year [4] - Over the past five years, the company has raised its dividend four times, averaging an annual increase of 0.43% [4] - The current payout ratio stands at 29%, indicating that the company distributes 29% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - The Zacks Consensus Estimate projects earnings for TAP to reach $6.34 per share in the fiscal year 2025, representing a 6.38% increase compared to the previous year [5] Investment Considerations - Dividends are favored by investors for various reasons, including enhancing stock investment profits and providing tax advantages [6] - Established firms with stable profits are typically viewed as the best dividend options, while high-growth companies and tech startups rarely offer dividends [7] - TAP is recognized as an attractive dividend investment opportunity, holding a Zacks Rank of 2 (Buy) [7]

Core Insights - The alcoholic beverage market is projected to grow from US$ 1.85 trillion in 2024 to US$ 2.88 trillion by 2033, with a compound annual growth rate (CAGR) of 5.02% from 2025 to 2033, driven by changing consumer preferences, rising disposable incomes, and the expansion of e-commerce [2][18]. Market Dynamics - **Rise in Disposable Incomes**: Increased disposable income, particularly in emerging economies, is linked to the growth of the alcoholic beverage market. Global household spending and disposable incomes are expected to rise by 2.6% in 2022, with significant spending on food and non-alcoholic drinks in the EU [4]. - **E-commerce Growth**: E-commerce platforms are catering to affluent consumers by offering a wide range of premium and specialty products, enhancing market accessibility [5]. - **Premiumization Trend**: Consumers are increasingly willing to pay more for premium alcoholic beverages, with notable growth in the consumption of premium whiskey and vodka, which saw year-over-year growth rates of 13.9% and 14.1%, respectively [6]. - **Shifting Consumer Preferences**: There is a growing demand for craft and premium products, with consumers seeking unique taste experiences. This trend has led to the rise of boutique wineries and artisanal distilleries [7]. - **Health-Conscious Trends**: The market is witnessing a shift towards low-alcohol, alcohol-free, and functional beverages, particularly among younger consumers who prioritize health and wellness [9]. Regional Insights - **United States**: The US market is characterized by strong demand for beer, wine, and spirits, with a notable trend towards health-conscious products and e-commerce growth [14]. - **United Kingdom**: The UK market shows diverse consumer preferences, with increasing demand for craft beers and premium wines, influenced by health trends and e-commerce [15]. - **India**: Rapid market growth is driven by urbanization and rising disposable incomes, with beer being the most popular choice among younger consumers [16]. - **United Arab Emirates**: Despite legal restrictions, the market is expanding due to tourism and a growing expatriate population, with increasing demand for premium products [17]. Company Analysis - **Market Overview**: The report covers a comprehensive analysis of the alcoholic beverage market, including key players such as Anheuser-Busch InBev, Carlsberg Group, and Pernod Ricard, among others [19]. - **Forecast Period**: The analysis spans from 2024 to 2033, providing insights into market dynamics and growth drivers [18].

Core Insights - Markets are showing signs of recovery due to soft inflation data, but concerns remain regarding global tensions, tariffs, and uncertainty over interest rate cuts [1][4][6] Consumer Staples Stocks - Investing in consumer staples stocks is recommended as they are considered defensive; notable picks include Molson Coors Beverage Company (TAP), Carriage Services, Inc. (CSV), and Tyson Foods (TSN) [2][3] - These stocks have a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [2] Inflation Data - The consumer price index (CPI) rose 0.2% sequentially in February, lower than the expected 0.3%, and year-over-year CPI increased 2.8%, below the anticipated 2.9% [4][6] - Core CPI, excluding food and energy, also rose 0.2% sequentially and 3.1% year-over-year, both below consensus estimates [5] Federal Reserve's Stance - The Federal Reserve has halted rate cuts due to persistent inflation, maintaining interest rates in the range of 4.25-4.5% [7] - The Fed is expected to adopt a cautious approach, with fewer rate cuts anticipated in 2025, possibly just a single 25 basis point cut in the second half of the year [8] Tariff Impacts - President Trump's tariffs have raised concerns about a potential global trade war, with 25% tariffs on Canadian and Mexican imports and 10% tariffs on Chinese goods [9][10] - These tariffs have contributed to market volatility, which is expected to continue until clarity on tariff policies is achieved [10] Company Profiles Molson Coors Beverage Company (TAP) - TAP has a diverse portfolio of brands and an expected earnings growth rate of 6.5% for the current year, with a Zacks Consensus Estimate improvement of 6.4% over the past 60 days [11][12] - The company has a beta of 0.81 and a current dividend yield of 3.11% [13] Carriage Services, Inc. (CSV) - CSV is a leading provider of death care services in the U.S., with an expected earnings growth rate of 21.1% for the current year and a Zacks Consensus Estimate improvement of 13.8% over the past 60 days [14][15] - The company has a beta of 0.91 and a current dividend yield of 1.18% [15] Tyson Foods (TSN) - TSN is the largest U.S. chicken company, with an expected earnings growth rate of 23.6% for the current year and a Zacks Consensus Estimate improvement of 8.8% over the past 60 days [16][17] - The company has a beta of 0.72 and a current dividend yield of 3.26% [17]

Core Insights - Molson Coors Beverage Company (TAP) is identified as an attractive value opportunity in the Beverages - Alcohol industry, trading at a forward 12-month price-to-earnings ratio of 9.63, which is below the industry average of 15.98 and the Consumer Staples average of 17.89, indicating it is undervalued compared to peers [1] - The company has experienced a stock price increase of 19.1% over the past month, outperforming the broader industry return of 15.9%, the consumer staples sector's increase of 5.7%, and the S&P 500's dip of 5.1% [4] - TAP's strategic focus on premiumization and strong brand positioning, along with expansion into non-alcoholic beverages, positions it for sustained growth [17] Valuation and Performance - TAP's forward price-to-earnings ratio is 9.63, significantly lower than the industry average of 15.98 and the Consumer Staples average of 17.89, highlighting its value proposition [1] - The stock has gained 19.1% in the last month, outperforming both the industry and the S&P 500 [4] Growth Drivers - TAP is enhancing its market position through a strong portfolio of established brands and focusing on expanding its market share via innovation and premiumization [7] - The above-premium segment now constitutes 27% of total sales in 2024, with plans for further expansion in the U.S. [9] - The company has retained over 80% of market share gains from the past two years, with brands like Coors Light and Miller Lite showing significant growth [9] Strategic Initiatives - TAP's revitalization plan aims for sustainable top-line growth by streamlining operations and reinvesting in brands and capabilities [10] - A strategic partnership with Fevertree Drinks plc allows TAP to expand its U.S. non-alcoholic portfolio, gaining exclusive rights to sell premium mixers [11] - The company is also focusing on premiumization in EMEA and APAC while exiting low-margin contracts to concentrate on stronger areas [14] Financial Outlook - TAP expects sales growth in the low single digits for 2025, with underlying earnings per share (EPS) projected to rise in the high single digits [13] - Analysts have positively revised EPS estimates, with the current fiscal year consensus at $6.35 per share, indicating expected year-over-year growth rates of 6.5% [15] Conclusion - TAP's strategic focus on premiumization, strong brand positioning, and expansion into non-alcoholic beverages enhance its long-term potential, supported by solid financial projections for 2025 [17]

Core Viewpoint - Molson Coors Beverage Company (TAP) has demonstrated strong stock performance, rising 14.5% over the past six months, significantly outperforming the Zacks Beverages - Alcohol industry and the broader Consumer Staples sector, which saw declines of 18.1% and 8%, respectively [1] Group 1: Company Performance - TAP's core power brands, including Coors Light, Miller Lite, and Coors Banquet, have retained over 80% of their combined volume share gains on a two-year stack basis in Q4 2024, indicating strong brand performance [3] - The company has achieved 23 consecutive months of higher share growth, with Coors Light being the number one light beer in Canada [4] - The brand Madrí has driven premiumization success in EMEA and APAC, with notable performance in Bulgaria and a successful re-launch of Caraiman in Romania [5] Group 2: Strategic Initiatives - Molson Coors is focused on portfolio premiumization in both Beer and Beyond Beer, enhancing its product offerings through impressive innovations [2] - The company has strategic plans for expanding the Peroni brand and the non-alcoholic category, with the consolidation of ZOA expected to contribute positively to revenue [6] - A license agreement to market and sell Fever-Tree products in the U.S. is anticipated to boost sales and profitability [6] Group 3: Financial Outlook - The Zacks Consensus Estimate for TAP's earnings per share (EPS) has increased by 3.6% to $6.35 for 2025 and by 6.3% to $6.77 for 2026, indicating year-over-year earnings growth of 6.5% and 6.7%, respectively [8] - Management projects low-single-digit sales growth for 2025 on a constant-currency basis and expects underlying EPS to grow in high single digits from 2024 [11] - The stock is currently trading at a price/earnings ratio of 9.84, lower than the industry average of 14.16, suggesting an attractive valuation [9]

Core Viewpoint - Molson Coors Brewing (TAP) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for Molson Coors reflects an improved earnings outlook, which is likely to positively impact its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [5]. - Rising earnings estimates and the subsequent rating upgrade suggest an improvement in Molson Coors' underlying business, which should lead to higher stock prices [6]. Importance of Earnings Estimate Revisions - Empirical research shows a strong correlation between earnings estimate revisions and stock movements, making tracking these revisions beneficial for investment decisions [7]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. Specific Earnings Estimates for Molson Coors - Molson Coors is projected to earn $6.35 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 6.5% [9]. - Over the past three months, the Zacks Consensus Estimate for Molson Coors has risen by 6.1% [9]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating [10]. - The upgrade of Molson Coors to a Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [11].

Financial Performance - For the year ended December 31, 2024, net sales were $11,627 million, a decrease of 0.6% from $11,702 million in 2023[351]. - Gross profit for 2024 was $4,533.4 million, representing an increase of 3.8% compared to $4,368.8 million in 2023[351]. - Operating income increased to $1,753.2 million in 2024, up 22% from $1,438.2 million in 2023[351]. - Net income attributable to Molson Coors Beverage Company for 2024 was $1,122.4 million, a 18.3% increase from $948.9 million in 2023[351]. - Basic earnings per share for 2024 was $5.38, compared to $4.39 in 2023, reflecting a 22.5% increase[351]. - Comprehensive income attributable to Molson Coors Beverage Company was $879.8 million for 2024, down from $1,038.1 million in 2023, reflecting a decrease of approximately 15%[354]. - Net income for the year ended December 31, 2024, was $1,157.7 million, an increase of 21% compared to $956.4 million in 2023[354]. Debt and Interest - As of December 31, 2024, the company had $4.9 billion in USD denominated fixed rate debt and $1.2 billion in foreign currency denominated fixed rate debt[319]. - Total interest expense for 2024 was $282.7 million, an increase from $234.0 million in 2023[351]. - Long-term debt increased to $6,113.9 million in 2024 from $5,312.1 million in 2023, reflecting an increase of 15%[356]. - The company issued EUR 800 million 3.8% senior notes on May 29, 2024, with total proceeds of $863.7 million[507]. Cash Flow and Assets - Cash and cash equivalents increased to $969.3 million in 2024 from $868.9 million in 2023, representing an increase of 11.7%[356]. - Net cash provided by operating activities for 2024 was $1,910.3 million, compared to $2,079.0 million in 2023, indicating a decrease of approximately 8.1%[360]. - Total assets as of December 31, 2024, were $26,064.3 million, a decrease from $26,375.1 million in 2023[356]. - Total liabilities decreased to $12,611.6 million in 2024 from $12,940.0 million in 2023, a reduction of approximately 2.5%[356]. Inventory and Expenses - Inventories decreased to $727.8 million in 2024 from $802.3 million in 2023, a decline of approximately 9.3%[356]. - Total marketing and advertising expenses, excluding depreciation and amortization, were approximately $1.1 billion for the years ended December 31, 2024 and 2023[393]. - The cost of goods sold includes brewing materials, packaging materials, and manufacturing expenses, impacting overall profitability[392]. Risk Management - The company manages foreign currency exposures through foreign currency forward contracts and net investment hedges[323]. - The company hedges its exposure to fluctuations in commodity prices, specifically for natural gas, barley, diesel, and aluminum[326]. - The company is exposed to volatility in interest rates, particularly related to U.S. Department of Treasury rates and Canadian government rates[317]. - The company uses derivatives for risk management purposes only, not for trading or speculative purposes[424]. Acquisitions and Investments - The company increased its investment in ZOA to 51% for a cash consideration of $53 million, recorded as a business combination[369]. - The company acquired a 75% equity interest in Blue Run for $77 million, including $64 million in cash, to expand its presence in the spirits category[371]. - The company obtained exclusive rights to produce, market, and sell Fever-Tree products in the U.S. effective February 1, 2025, and made an investment of approximately $90 million in Fever-Tree Drinks Plc[450]. - The company acquired the remaining 49.9% ownership interest in Cobra U.K. for a cash payment of $89 million, finalizing the transaction on October 21, 2024[459]. Shareholder Returns - The company paid dividends totaling $369.2 million in 2024, up from $354.7 million in 2023, marking an increase of 4.3%[360]. - Dividends declared to eligible shareholders totaled $1.76 per share for the year ended December 31, 2024, compared to $1.64 per share in 2023[406]. - The company declared a quarterly dividend of $0.47 per share, payable on March 14, 2025, to shareholders of Class A and Class B common stock[451]. Accounting and Reporting - The company maintained effective internal control over financial reporting as of December 31, 2024, according to the management's assessment[334]. - The company adopted ASU 2023-07, improving reportable segment disclosures, which impacted the presentation and disclosure of segment reporting but not the financial position or results of operations[452]. - The company has no new accounting pronouncements that significantly impact the consolidated financial statements other than those noted[456].