Monday, October 27, 2014

Molson Coors Canada

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Jos Schmitt.

I do not own this stock of Molson Coors Canada (TSX-TPX.B, NYSE-TAP). In 2008 I did a spreadsheet on this stock as it has recently been recommended and generally, beer companies make good money. Labatt's was one of the original companies that I purchased and I did very well with it before it was bought out.

The dividends have grown better in US$ terms than in CDN$ terms. For Canadians, the dividends are moderate and the growth is moderate. The current dividend yield is 2% with the 5 and 10 years growth of dividends at 8% and 8.8% per year. For Canadians, the dividends are paid in US$ so they will fluctuate from quarter to quarter depending on the exchange rate.

The total return over the past 5 and 10 years to date is good. Part of the reason is that the stock's price is up some 39% to far this year. The 5 and 10 year total return is at 14.19% and 9.41% per year with 11.95% and 6.30% per year from capital gains and 2.23% and 3.10% from dividends.

Outstanding shares have increased by 1.2% and 7.7% per year over the past 5 and 10 years. The years of 2007 and 2008 were really bad years for this company and especially revenues were hit hard. Even through there had been growth in revenues since then they are still not back to where they were. Also growth is especially low or negative over the past 10 years.

This company reports in US$ and revenues are down by 2% and up by 1% per year over the past 5 and 10 years. Revenue per Share is down by 3.2% and down by 8.3% per year over the past 5 and 10 years. EPS is up by 8% and 2.6% per year over the past 5 and 10 years. CFPS is up by 4.2% and down by 1.2% per year over the past 5 and 10 years.

The Return on Equity has been below 10% 7 of the past 10 years and 4 of the past 5 years. The ROE for 2013 was 6.6%. The ROE for comprehensive income was a bit higher at 8.8%.

The Liquidity Ratios have been low for the last few years. The Liquidity Ratio for 2013 was just 0.72. If you add in cash flow after dividends the ratio becomes 1.15. If the ratio is below 1.00 it means that current assets cannot cover current liabilities.

The Debt Ratio has always been good and the one for 2013 is very good at 2.25. The Leverage and Debt/Equity Ratios have been generally fine and the ones for 2013 are at 1.80 and 0.80, respectively.

There is insider ownership with the CEO having shares worth $12.9M and the CFO having shares worth around $1.2M. There is large ownership by the Coors family and it seems to be around $5.3B. There was some $43.8M of net insider selling over the past year but this is small compared to the market cap of this stock at only 0.28% of the market cap.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Hold, but the consensus is a Buy. The 12 month consensus stock price in US$ is $80.80. This implies a total return of 13.79% with 2.05% from dividends and 11.74% from capital gains. I can find no consensus stock price in CDN$.

The 5 year low, median and high median Price/Earnings Ratios are 10.99, 12.28 and 13.66. The current P/E Ratio is 16.40 based on a stock price of $82.75 and 2014 EPS estimates of $5.05. This stock price test in CDN$ suggests that the stock price is relatively high. However, a P/E ratio of 16.40 is not particularly high. Using US$, the test comes out the same.

I get a Graham Price of $77.15 CDN$. The 10 year low, median and high Price/Graham Price Ratios are 0.79, 0.87 and 0.98. The current P/GP Ratio is 1.07. This stock price test suggests that the stock price is relatively high.

The 5 year median Dividend Yield is 2.57% and the current dividend yield at 2.05% is some 22% lower. The historical average and median dividend yields are lower at 2.44% and 2.22% which are 18% and 10% higher than the current dividend yield. The first stock price test suggests that the stock price is relatively high. The last two suggest that the stock price is still reasonable, but somewhat in the higher range of reasonable. You get the same results testing in US$ terms.

The 10 years Book Value per Share Ratio is 1.19 and the current P/B Ratio at 1.58 is some 33% higher. This stock price test suggests that the stock price is relatively high. You get the same results in both currencies.

Sound bit for Twitter and StockTwits is: Price rather high. You have to wonder if this is a good stock for Canadians. It is not really a Canadian stock anymore as the Canadian shares are really winding down. We might be better off looking at a small Canadian Brewery than this large American one. See my spreadsheet at tpx.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Molson Coors Brewing Company is a leading global brewer delivering extraordinary brands that delight the world's beer drinkers. It brews, markets and sells a portfolio of leading premium brands such as Coors Light, Molson Canadian, Carling, Blue Moon, and Keystone Light across North America, Europe and Asia. It operates in Canada through Molson Coors Canada; in the US through Miller Coors; and in the U.K. and Ireland through Molson Coors UK. Its web site is here Molson Coors.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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