Molson Coors (TAP) Stock Closed Up, Nears Deal to Buy Rest of MillerCoors
NEW YORK (TheStreet) -- Molson Coors Brewing (TAP) - Get Report stock closed higher by 1.06% to $88.29 on Tuesday afternoon, as the brewer prepares to purchase the rest of its MillerCoors joint venture with SABMiller (SBMRY), sources told the Wall Street Journal.
SABMiller would sell its 58% of MillerCoors to Molson Coors for roughly $12 billion, in an attempt to gain regulatory approval for its proposed merger with Anheuser-Busch (BUD), the Journal reports.
Last year, MillerCoors reported revenue of $7.85 billion, almost double Molson Coors's revenue of $4.15 billion, the Journal adds. The joint venture added $561.8 million to Molson Coors's pretax profit of $586.3 million in 2014.
Additionally, Molson Coors would gain Miller brands such as Miller High Life, Miller Lite and Miller Genuine Draft.
The company recently ended its agreement with SABMiller to sell Miller brands in Canada, which cost the company upwards of $60 million in sales, according to the Journal.
The MillerCoors takeover is dependent upon the successful closing of the SABMiller and Anheuser-Busch deal.
Separately, TheStreet Ratings team rates MOLSON COORS BREWING CO as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate MOLSON COORS BREWING CO (TAP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Beverages industry. The net income increased by 148.3% when compared to the same quarter one year prior, rising from -$34.40 million to $16.60 million.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- MOLSON COORS BREWING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MOLSON COORS BREWING CO reported lower earnings of $2.75 versus $3.06 in the prior year. This year, the market expects an improvement in earnings ($3.79 versus $2.75).
- The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- 48.23% is the gross profit margin for MOLSON COORS BREWING CO which we consider to be strong. Regardless of TAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.63% trails the industry average.
- You can view the full analysis from the report here: TAP
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.