Long-established in the Beverages - Alcoholic industry, Molson Coors Beverage Co (TAP, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 3.57%, juxtaposed with a three-month change of -8.02%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Molson Coors Beverage Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 6/10
- Growth rank: 3/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned Molson Coors Beverage Co the GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding Molson Coors Beverage Co Business
Molson Coors Beverage Co, with a market cap of $13.15 billion and sales of $11.18 billion, is a prominent player in the Beverages - Alcoholic industry. The company boasts an operating margin of 11.73%. It owns well-known beer brands including Miller, Coors, Blue Moon, and Carling, and ranks as the second-largest beer maker in both value and volume terms in the U.S., Canada, and the United Kingdom. Through licensing agreements, it also brews and distributes beer and hard seltzer under partner brands from Heineken, Anheuser-Busch InBev, Asahi, and Coca-Cola. North America remains its largest market contributing over 80% of total revenue.
Financial Strength Breakdown
Molson Coors Beverage Co's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 1.43, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.15 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 5.79, which is above Joel Tillinghast's warning level of 4 and is worse than 83.44% of 151 companies in the Beverages - Alcoholic industry.
Growth Prospects
A lack of significant growth is another area where Molson Coors Beverage Co seems to falter, as evidenced by the company's low Growth rank. Over the past five years, Molson Coors Beverage Co has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -18.6, while the five-year growth rate is at -17.5. These figures underscore potential challenges in the company's profitability. Lastly, Molson Coors Beverage Co predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Molson Coors Beverage Co has a rich history and a strong brand portfolio, its financial metrics suggest that it may struggle to maintain its historical performance. Therefore, investors should exercise caution and conduct thorough research before investing in this company.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
