Is it a good company at a reasonable price? Just because a stock is cheap, it does not mean it is a buy. If you bought this you may make a satisfactory dividend, but dividends have been unstable recently. The company seems to be improving lately, but this is a risk. If I was looking for dividends, I would probably look elsewhere. However, the currently price does seem relatively cheap.
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 they had cut their dividends in 2020. They have been raising them rapidly and the dividends are back to where they were in 2018. However, they are not back to the level of 2019 and are still 16% below that level.
As you can see from the following chart, there has been no growth over the past 5 years and little over the past 10 years. N/C means that the value fell more than 100% (and my formula do not handle negative values well).
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | -2.74% | -0.55% |
| 5 | AEPS Growth | -8.28% | -1.71% |
| 5 | Net Income Growth | -112.40% | N/C |
| 5 | Cash Flow Growth | -19.52% | -4.25% |
| 5 | Dividend Growth | -7.32% | -1.51% |
| 5 | Stock Price Growth | -37.22% | -8.89% |
| 10 | Revenue Growth US$ | 173.23% | 10.57% |
| 10 | AEPS Growth | -39.04% | -4.83% |
| 10 | Net Income Growth | -139.57% | N/C |
| 10 | Cash Flow Growth | 52.69% | 4.32% |
| 10 | Dividend Growth | 18.75% | 1.73% |
| 10 | Stock Price Growth | 20.40% | 1.87% |
However, you can see that there has been growth in these items over the past 12 months.
| Item | Value | Growth |
|---|---|---|
| Revenue Growth US$ | $11,177.60 | 4.45% |
| AEPS Growth | $4.69 | 14.39% |
| Net Income Growth | $40.80 | -123.27% |
| Cash Flow Growth | $1,729.60 | 15.15% |
| Dividend Growth | $1.64 | 7.89% |
| Stock Price Growth | $59.38 | 15.26% |
If you had invested in this company in December 2012, for $1,019.52 you would have bought 24 shares at $42.48 per share. In December 2022, after 10 years you would have received $424.17 in dividends. The stock would be worth $1,608.00. Your total return would have been $2,032.17. This is a total return would be a total return of 15.09% per year with 13.27% from capital gain and 1.82% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $42.48 | $1,019.52 | 24 | 10 | $424.17 | $1,608.00 | $2,032.17 |
The current dividend yield is moderate with dividend growth restarting. The dividend yield is moderate (2% to 4% ranges at 2.78%. The 5, 10 and historical dividend yields are also moderate at 2.33%, 2.21% and 2.33%. These values are in CDN$ and will vary somewhat in US$.
The dividend growth over the past 5 years is negative, with the 5 year average dividend going down 1.5% per year. Dividends were cut in 2020 with only 1 dividend being paid. When they were restated in 2021, they were 40% lower. They did a big increase in 2022 of 124%. The last dividend increase was in 2023 and it was for 7.9%. These values are in US$ and dividends are paid in US$.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is negative with 5 year coverage at 112%. This DPR is expected to be around 35% in 2023. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 37% with 5 year coverage at 29%. The DPR for 2022 for Cash Flow per Share (CFPS) is 17% with 5 year coverage at 13%. The DPR for 2022 for Free Cash Flow (FCF) is 39% with 5 year coverage at 22%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -187.65% | 111.95% |
| AEPS | 37.07% | 28.74% |
| CFPS | 17.22% | 13.02% |
| FCF | 39.16% | 22.28% |
For Debt Ratios the Liquidity Ratio is important and is too low, the Intangible Ratio is too high and the other ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is fine at 0.53. The Intangible Ratio/Market Cap Ratio is far to higher and generally when this high you will get a future write-down. The Liquidity Ratio for 2022 is low at 0.78. It means that the current assets cannot cover the current liabilities. If you add in Cash Flow after Dividends it at 2022 at 1.12 and currently at 1.30. This is still low and a good value is 1.50 or higher. The Debt Ratio for 2022 is good at 2.00. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.04 and 1.02.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.53 | 0.46 |
| Intang/GW | 1.54 | 1.35 |
| Liquidity | 0.78 | 0.87 |
| Liq. + CF | 1.12 | 1.30 |
| Debt Ratio | 2.00 | 1.98 |
| Leverage | 2.04 | 2.06 |
| D/E Ratio | 1.02 | 1.04 |
The Total Return per year is shown below for years of 5 to 27 to the end of 2022 in CDN$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.01% | -5.87% | -7.74% | 1.87% |
| 2012 | 10 | 4.88% | 8.63% | 5.12% | 3.51% |
| 2007 | 15 | 8.19% | 4.74% | 2.14% | 2.60% |
| 2002 | 20 | 7.04% | 4.70% | 1.85% | 2.85% |
| 1997 | 25 | 5.82% | 10.38% | 6.11% | 4.27% |
| 1995 | 27 | 4.83% | 9.97% | 5.91% | 4.05% |
The Total Return per year is shown below for years of 5 to 31 to the end of 2022 in US$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | -1.51% | -7.04% | -8.89% | 1.85% |
| 2012 | 10 | 1.73% | 4.95% | 1.87% | 3.08% |
| 2007 | 15 | 5.94% | 3.60% | 0.93% | 2.67% |
| 2002 | 20 | 6.77% | 5.29% | 2.63% | 2.66% |
| 1997 | 25 | 7.08% | 7.47% | 4.57% | 2.90% |
| 1992 | 30 | 6.20% | 9.68% | 6.30% | 3.38% |
| 1990 | 32 | 5.80% | 8.01% | 5.18% | 2.83% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.18, 10.89 and 12.61. The corresponding 10 year ratios are 11.38, 13.90 and 61.42. The corresponding historical ratios are 11.68, 13.83 and 16.22. The current P/E Ratio is 12.87 based on a stock price of $80.50 and EPS estimate for 2023 $6.26. The current ratio is between and low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 10.94, 12.85 and 14.65. The corresponding 10 year ratios are 11.23, 13.05 and 15.43. The current P/AEPS is 11.74 based on a stock price of $59.38 and AEPS estimate for 2023 of $5.02. The current ratio is low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar result in CDN$.
I get a Graham Price of $105.10. 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 0.77 based on a stock price of $80.50. The ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.13. The current P/B Ratio is 1.03 based on a Book Value of $13,027M, Book Value per Share of $57.44 and a stock price of $59.38. The current ratio is 8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar result in CDN$.
I also have Book Value per Share estimate for 2023 of $61.90. The P/B Ratio would be 0.96 with Book Value of $14,0.39M, and a stock price of $59.38. This ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.05. The current P/CF Ratio is 6.70 based on a stock price of $59.38, Cash Flow per Share estimate for 2023 of $8.86 and a stock price of $59.38. The current ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar result in CDN$.
I get an historical median dividend yield of 1.88%. The current dividend yield is 2.76% based on a stock price of $59.38 and dividends of $1.64. The current dividend is 47% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. In CDN$ the difference is the current dividend is 19% above the historical dividend yield is 2.33%. However, the dividends are paid in US$, so I am going with US$. There are differences in dividends due to currency exchange.
I get a 10 year median dividend yield of 2.17%. The current dividend yield is 2.76% based on a stock price of $59.38 and dividends of $1.64. The current dividend is 27% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 1.65. The current P/S Ratio is 1.16 based on Revenue estimate for 2023 of $11,600M, Revenue per Share of $51.41 and a stock price of $59.38. The current ratio is 30% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably cheap. The 10 year dividend yield test says this and it is confirmed by the P/S Ratio test. This occurs in both US$ and CDN$. However, the rest of the testing does point to a reasonable not a cheap stock price.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2), Hold (14) and Sell (3). The consensus would be a Hold. The 12 months stock price consensus would be $92.99 ($68.07 US$) with a high of $105.19 ($77.00 US$) and low of $77.87 ($57.00 US$). This would imply a total return of 18.30% with 15.52% from capital gains in 2.78% in dividends in CDN$.
Analysts have no recent postings on Stock Chase for US company. The old postings are negative. This same for postings on Stock Chase for the CDN$ stock. Stock Chase gives this company 1 star out of 5. The company is not on any of the lists of dividends stocks I follow. Jeremy Bowman on Motley Fool says it is a good stock for dividends. Rich Duprey on Motley Fool says this company is not only into beer but into other beverages such as Hard Seltzers and the company is turning itself around. There are no recent remarks for the Canadian side of this company on Motley Fool. The company put out a Press Release for their fourth quarter of 2022. The company put out a press release press release on their second quarter of 2023 results.
Simply Wall Street via Yahoo Finance looks at the company. Simply Wall Street has 4 warnings on this company of dividend of 2.8% is not well covered by earnings; large one-off items impacting financial results; has a high level of debt; and profit margins (0.4%) are lower than last year (6.9%).
Molson Coors Beverage Company manufactures, markets, and sells beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers flavored malt beverages including hard seltzers, craft, and ready to drink beverages. The company was formerly known as Molson Coors Brewing Company and changed its name to Molson Coors Beverage Company in January 2020. 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 Corp (TSX-BN, NYSE-BN) ... learn more on Wednesday, October 18, 2023 around 5 pm. Tomorrow on my other blog I will write about LeDrew 3 Minute Interviews .... learn more on Tuesday, October 17, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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