Monday, December 22, 2008

Molson Coors Canada

I did a spreadsheet on this stock (TSX-TPX.A) as it has recently been recommended and generally, beer companies make good money. However, since Molson was taken over by Coors, problems of investing in this company would be currency exchange. That is the company can be making money, but because of the differences in exchange rates between US and Canadian currency, you can lose money, or not do well.

It appears that those who held Molson stock before the buyout by Coors, would have done very well to the last anniversary date of December 2007. The 5 year return on this stock would be, in CDN $, 20.26% per year and dividends would have increased 10.7% per year. However, if you had had Coors instead, then using the US/CDN Exchange rate, the 5 year return would be 1.7% per year and the dividends would have gone down slightly by .5% per year.

The problem is that in 2002, the currency exchange rate was 1.5796 and in 2007, it was 0.9881. If you look at the stock prices today, they have risen by 9.4% in Canadian prices since December 2007, but in US prices, they have risen by 1.5% only. This is because the US/CDN Exchange rate is at 1.2225 today.

If you look at this stock from a US$ point of view, the Revenue, the Dividends, the Price and the Book Value have all increased nicely. The growth in Earnings per Share (EPS) is ok. The problems I see are the low growth in the Cash Flow of only 2.6% per year and the current high Accrual Ratio of 8.24%.

Tomorrow I will look at what analyst are currently saying about this stock. This spreadsheet took a long time to do, as I had started it last week. It is always difficult when you have a company being bought out to figure how stockholders would do. It is valid to look at it from both the view point of ex-Molson stockholders and view point of Canadians investing in the ex-Coors company.

Molson Coors Canada is a brewery company. Brands include Coors Light, Blue Moon, Keystone Light, Carling, Rickard’s and Creemore Springs. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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