Friday, November 4, 2016

Molson Coors Canada

Sound bite for Twitter and StockTwits is: Relatively Expensive. That I should find this stock expensive is hardly surprising. The stock is up by 226% over the past 4 year in CDN$ terms and 143% in US$ terms. (The US$ is up 34% against the CDN$ over the same time period.) See my spreadsheet on Molson Coors Canada.

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 generally 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.

One thing stands out and that is that they have $9,981.5M cash at the end of the third quarter of 2016. This is because they increased debt and issued stock. It looks like this was done to buy the remaining 58% stake in the MillerCoors' joint venture. The stock of this company has also been soaring.

This is a dividend growth company. The dividends are paid in US$, so if you are a Canadian, your dividends will fluctuate based on the currency exchange rates. The current dividend is low but it is generally moderate. The dividend increases are moderate. The current dividend is 1.58% based on $1.64 US$ and a stock price of $104.00. (It is the same in CDN$ that is a dividend yield of 1.58% with Dividends of $2.20 and a stock price of $138.73.) The historical Dividend Yield is 1.9% and the 5 year median Dividend Yield is 2.56%.

Dividends have grown at the rate of 8.7% and 9.9% per year in US$ terms over the past 5 and 10 years. They have grown better in CDN$ terms because of a falling CDN$. The dividend growth in CDN$ terms is at 16.1% and 11.8% per year over the past 5 and 10 years.

The Dividend Payout Ratio for 2015 was a bit high in 2015 at 85% of EPS. However, over the past 5 years the average DPR for EPS was 50%. The DPR for CFPS was 35% for 2015 and was lower at 24% for the average for the past 5 years. (This is in US$, but you do not get very different results using CDN$.)

There has not been much growth in Revenue, Earnings or Cash Flow lately, but analysts expect better results in 2016. For example Revenue per Share is up just 1.9% over the past 5 years. Analysts expect Revenue per Share to grow 172% in 2016. However, Revenue in the third quarter is down. If you compare the 12 months to the end of the third quarter to the 12 months to the end of 2015, Revenue is down by 3.7%. Revenue does not seem to be going in the right direction.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.01, 17.45 and 18.88. The corresponding 10 year values are 15.32, 16.94 and 18.55. The historical values are 13.36, 15.91 and 18.55. These are all very close. The current P/E Ratio is 23.02 based on a stock price of $138.73 and 2016 EPS estimate of $6.03 CDN$ ($4.50 US$). This stock price testing suggests that the stock is relatively expensive.

I get a Graham Price of $89.58. The 10 year low, median and high median Price/Graham Price Ratios are 0.79, 0.87 and 0.98. The current P/GP Ratio is 1.55 based on a stock price of $138.73. This stock price testing suggests that the stock is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.14. The current P/B Ratio is 2.34, a value some 105% above the 10 year median ratio. The current P/B Ratio is based on BVPS of $59.19 and a stock price of $138.73. This stock price testing suggests that the stock is relatively expensive.

I get a historical median Dividend Yield of 2.22%. The current Dividend Yield of 1.58% based on dividends of $2.20 CDN$ ($1.64 US$) and a stock price of $138.73 CDN$. The current Dividend Yield is some 28% higher than the historical median. This stock price testing suggests that the stock is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy and Buy recommendations. The most recommendations are a Buy and the consensus is a Buy. The 12 month Stock Price is $127.33. This implies a total return of 24.01% based on a stock price of $104.00. Of this return 22.43% would come from capital gain and 1.58% from dividends.

The company issued its third quarterly report results on Business Wire. There is also another report on their gaining full ownership of MillerCoors and Global Miller Brand Portfolio on Business Wire. Black Coral Research has put out a report on this company at Seeking Alpha .

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here.

The last stock I wrote about was about was Pason Systems Inc. (TSX-PSI, OTC-PSYTF)... learn more . The next stock I will write about will be TransForce Inc. (TSX-TIF, OTC-TFIFF)... learn more on Monday, November 7, 2016 around 5 pm.

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 MillerCoors; and in the U.K. and Ireland through Molson Coors UK. Its web site is here Molson Coors Canada.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

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