Is it a good company at a reasonable price? The stock price is probably cheap. This would not be my favourite consumer stock. Dividends are unstable. Total Returns have been very inconsistent.
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.
When I was updating my spreadsheet, I noticed that their intangibles items of the Balance Sheet are greater than the market cap of the stock. The Intangibles/Market Cap Ratio is 1.26. It means than the intangibles are on the Balance Sheet at a higher value of the market value of the stock. This is not good. They also have Goodwill on the Balance Sheet and the Goodwill/Market Cap Ratio is 0.63. If you add these ratios together, the ratio is 1.84.
They have been mucking around with dividends lately. Dividend changes from 2019 to 2022 are up 19.51%, down 70.92%, up 19.30%, and up 123.53%. In 2019 dividends were $1.96 and currently they are $1.52, some 22% below the 2019 dividends.
If you had invested in this company in December 2011, for $1,037.30 you would have bought 23 shares at $45.10 per share. In December 2021, after 10 years you would have received $388.76 in dividends. The stock would be worth $1,352.40. Your total return would have been $1,741.16.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $45.10 | $1,037.30 | 23 | 10 | $388.76 | $1,352.40 | $1,741.16 |
The dividend yields are moderate with dividend growth restarted. The current dividend yield is moderate (2% to 4%) at 3.09%. The 10 year median dividend yields are also moderate at 2.17%. The 5 year and historical median dividend yields are low (below 2%) at 1.84% and 1.87%. The dividends were cut in 2020 and 2021. In 2021, only 2 dividends were paid. The dividends are down by the end of 2021 by 16% per year. In 2022, the dividends were increased 11.8% and 4 dividends will be paid.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 15% with 5 year coverage at 50%. The DPR for EPS is expected to be 45% in 2022 when 4 dividends are again paid. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 16% with 5 year coverage at 29%. The DPR for AEPS for 2022 is expected to be 39%. The DPR for Cash Flow per Share (CFPS) for 2021 is 7% with 5 year coverage at 13%. The DPR CFPS is expected to be 21% in 2022. The DPR for Free Cash Flow (FCF) for 2021 is 14% with 5 year coverage at 21%. The DPR for 2022 for FCF is expected to be 32%.
Debt Ratios are fine but they have a low Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2021 is 0.63. It is fine. The Liquidity Ratio for 2021 is low at 0.77. If you add in Cash Flow after dividends, it is still low at 1.16. I prefer this to be at 1.50 or higher. The Debt Ratio is good at 1.98. The Leverage and Debt/Equity Ratios are fine at 2.06 and 1.04.
The Total Return per year is shown below for years of 5 to 26 to the end of 2021 in CDN$ from Molson into Molson Coors. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | -17.10% | -13.06% | -14.75% | 1.69% |
| 2011 | 10 | -3.75% | 6.13% | 2.69% | 3.44% |
| 2006 | 15 | 0.97% | 4.69% | 1.87% | 2.82% |
| 2001 | 20 | 2.76% | 7.12% | 3.33% | 3.79% |
| 1996 | 25 | 2.20% | 9.27% | 5.13% | 4.15% |
| 1995 | 26 | 2.08% | 9.71% | 5.44% | 4.27% |
The Total Return per year is shown below for years of 5 to 31 to the end of 2021 in US$ from Molson into Molson Coors. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | -16.14% | -12.07% | -13.79% | 1.71% |
| 2011 | 10 | -5.83% | 3.68% | 0.57% | 3.11% |
| 2006 | 15 | 0.40% | 1.76% | -0.72% | 2.48% |
| 2001 | 20 | 2.69% | 5.61% | 2.80% | 2.81% |
| 1996 | 25 | 4.08% | 10.46% | 6.62% | 3.84% |
| 1991 | 30 | 3.39% | 8.03% | 5.07% | 2.96% |
| 1990 | 31 | 3.28% | 7.89% | 4.99% | 2.90% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.71, 13.63 and 15.56. The corresponding 10 year ratios are 12.65, 14.77 and 17.39. The corresponding historical ratios are 12.96, 16.15 and 18.54. The current P/E Ratio is 14.58 based on a stock price of $49.12 and EPS estimate for 2022 of $3.37. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is done in US$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.94, 12.85 and 14.76. The corresponding 10 year ratios are 10.70, 12.70 and 14.70. The current P/AEPS Ratio is 12.59 based on AEPS estimate for 2022 of $3.90 and a stock price of $49.12. The current ratio is between the low and median ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is done in US$.
I get a Graham Price of $91.81. The 10-year low, median, and high median Price/Graham Price Ratios are 0.84, 0.97 and 1.10. The current P/GP Ratio is 0.73 based on a stock price of $67.00. This ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is cheap. This testing is done in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.13. The current P/B Ratio is 0.83 based on a Book Value of $13,373M, Book Value per Share of $59.12 and a stock price of $49.12. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is done in US$.
I also have a Book Value per Share estimate. The 10 year median P/B Ratio is 1.13. With the Book Value per Share estimate of $63.90, I get a ratio of 0.77 based on a stock price of $49.12 and a Book Value of $14,454M. The current ratio is 32% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is done in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.07. The current P/CF Ratio is 6.63 based on a stock price of $49.12, Cash Flow per Share estimate for 2022 of $7.41 and a Cash Flow of $1,676M. The current is 18% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is done in US$.
I get an historical median dividend yield of 1.87%. The current dividend yield is 3.09% based on dividends of $1.52 and a stock price of $49.12. The current dividend yield is 65% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is done in US$.
I get a 10 year median dividend yield of 2.17%. The current dividend yield is 3.09% based on dividends of $1.52 and a stock price of $49.12. The current dividend yield is 43% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is done in US$.
The 10-year median Price/Sales (Revenue) Ratio is 1.93. The current P/S Ratio is 1.04 based on a stock price of $49.12, Revenue estimate for 2022 of $10,737M and Revenue per Share of $47.46. The current ratio is 46% below the 10 year median ratio. This stock price testing suggests that the stock price is cheap. This testing is done in US$.
Results of stock price testing is that the stock price is probably cheap. I did most of the testing in US$ because it trades most often in US$ as TAP. The dividend yield tests say the stock price is cheap and this is confirmed by the P/S Ratio test. Other tests say it is reasonable or cheap.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (1), Hold (13) and Underperform (4). The consensus is a Hold. The 12 month stock price consensus is $55.05 US$. This implies a total return 15.17% with 12.07% from capital gains and 3.09% from dividends based on a current stock price of $49.12 US$.
There is only one comment for 2022 on Stock Chase. Stock Chase gives this stock 1 star out of 5. It is not on the Money Sense List. Travis Hoium on Motley Fool talks about why this stock fell in August 2022. It is not good news. Tony Dong on Motley Fool talks about why he thinks this stock is not a buy. The company put out a Press Release on their fourth quarter results. The company put out a Press Release on their results for the second quarter of 2022.
Simply Wall Street reviews this stock on Yahoo Finance. They do not care much for this stock either. They give out two warnings signs of has a high level of debt; and unstable dividend track record.
Molson Coors Canada is a large global brewer and distributor of beer and other malt beverages. Its two segments are the Americas and EMEA and APAC segments. Americas segment operates in the U.S., Canada, and various countries in the Caribbean, Latin and South America and EMEA and APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa, and Asia Pacific. Its breweries are located across the U.S., Canada, and Europe, with most the company's revenue generated in Americas. Its web site is here Molson Coors Canada.
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 Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM) ... learn more on Friday, October 21, 2022 around 5 pm. Tomorrow on my other blog I will write about 5 Ways Your Mind Sabotages Your Spending .... learn more on Thursday, October 20, 2022 around 5 pm.
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