Molson Coors Rises 7% in 6 Months: Should You Buy, Hold or Avoid?

Stock Performance - Molson Coors Beverage Company (TAP) stock has grown 7% in the past six months, outperforming the Zacks Beverages - Alcohol industry, which dropped 16.6%, and the broader Consumer Staples sector, which fell 4.4% [1] Company Strategies - The company is focused on portfolio premiumization in both Beer and Beyond Beer to enhance its product portfolio [1] - Molson Coors' Acceleration Plan builds on the success of its 2019 Revitalization Plan and revolves around five pillars: core power brands' growth, portfolio premiumization, beyond beer expansion, investment in capabilities, and support to its people and communities [2] - The company plans to invest in iconic brands and growth opportunities in the above-premium beer space, expand in adjacencies and beyond beer, and develop digital competencies for commercial functions, supply-chain-related system capabilities, and employees [3] Growth Opportunities - ZOA, a better-for-you energy drink, has shown high-growth potential with its direct-to-consumer business being a key sales driver, expected to boost Molson Coors' portfolio and profitability [4] Challenges - The company faces cost inflation, with the underlying cost of goods sold per hectoliter rising 5.6% in Q3 2024 due to increased materials and manufacturing costs, deleveraged volumes, and unfavorable mix in the Americas segment [6] - Lower U.S. brand volumes and underperformance of the U.S. beer industry are additional pressures [7] Valuation - Molson Coors' stock is trading at a discount with a forward 12-month price/earnings ratio of 9.34, lower than the industry's 14.23 and its five-year high of 15.57 [8] Earnings Outlook - The Zacks Consensus Estimate for Molson Coors' 2025 earnings per share (EPS) indicates a 2.8% year-over-year increase [11] Consumer Staples Sector Highlights - Freshpet, Inc (FRPT) has a trailing four-quarter average earnings surprise of 144.5% and a Zacks Rank 1 (Strong Buy) with current financial-year sales and EPS expected to grow 24.5% and 66.8%, respectively [12] - United Natural Foods (UNFI) has a Zacks Rank 1 with current financial-year sales and EPS expected to grow 0.3% and 442.9%, respectively, and a trailing four-quarter average earnings surprise of 553.1% [13] - McCormick & Company (MKC) has a Zacks Rank 2 (Buy) with current financial-year sales and EPS expected to grow 2.3% and 6.4%, respectively, and a trailing four-quarter average earnings surprise of 13.8% [14]