Molson Coors Likely to Beat 1Q Earnings - Analyst Blog
06 Maggio 2013 - 1:50PM
Zacks
We expect beverage maker Molson Coors Brewing
Company (TAP) to beat expectations when it reports first
quarter 2013 results on May 7.
Why a Likely Positive Surprise?
Our proven model shows that Molson Coors is likely to beat
earnings because it has the right combination of two key
ingredients.
Positive Zacks ESP: Molson Coors’Expected
Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better
Method) stands at +2.86%. This represents the difference between
the Most Accurate estimate and the Zacks Consensus Estimate. This
is very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks Rank #3 (Hold): Molson Coors currently
carries a Zacks Rank #3 (Hold). Note that stocks with Zacks
Ranks #1, #2 and #3 have a significantly higher chance of beating
earnings. The sell rated stocks (#4 and #5) should never be
considered going into an earnings announcement.
The combination of the stock’s Zacks Rank #3 (Hold) and an ESP
of +2.86% makes us confident of an earnings beat on May 7.
What is Driving the Better Than Expected
Earnings?
The improvement in beer volumes on the back of a recovery in the
U.S. economy and increase in consumer spending is driving the stock
higher. In addition, the company is making efforts to expand in
fast growing emerging markets and introduce new products, going
forward. The addition of the StarBev operations is also expected to
boost net sales growth in the upcoming quarter.
The acquisition of StarBev (June 2012) has significantly
enhanced the company’s portfolio of premium brands, despite a
sluggish European economy. It has also created opportunities for
the company in Central Europe to extend its key brands, taking
advantage of the attractive beer market. Also, with economic
recovery underway in the U.S. and China, the company expects
increased consumer spending.
Overall, we are encouraged with the company’s strong brand
portfolio and cost-saving initiatives. Molson Coors has also grown
its market share through innovation. Other than this, the company
liquidated its under-performing China joint venture, restructured
its Coors Light business in the rest of China, improved performance
in Japan, and integrated the Central Europe license and export
business in 2012. These initiatives are expected to improve the
efficiency of the organization and generate additional resources to
invest in brands and innovation in the coming quarters.
Other Stocks to Consider
Molson Coors is not the only firm looking up this earnings
season. You can also consider these stocks that offer exposure to
the attractive consumer staples sector:
J&J Snack Foods Corp (JJSF) with Earnings
ESP of +0.90% and a Zacks Rank #2 (Buy)
Campbell Soup Company (CPB) with Earnings ESP
of +1.79% and a Zacks Rank #2 (Buy)
Hillshire Brand Company (HSH) with Earnings ESP
of +6.67% and a Zacks Rank #2 (Buy).
CAMPBELL SOUP (CPB): Free Stock Analysis Report
HILLSHIRE BRAND (HSH): Free Stock Analysis Report
J&J SNACK FOODS (JJSF): Free Stock Analysis Report
MOLSON COORS-B (TAP): Free Stock Analysis Report
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