Why Molson Coors (TAP) Stock Is Lower Today

NEW YORK (TheStreet) -- Shares of Molson Coors Brewing Co. (TAP) are down -1.65% to $58.34.

Earlier today, the brewer was downgraded at Nomura to "neutral" from "buy," a valuation call, based on a 12-month price target of $60.

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TheStreet Ratings team rates MOLSON COORS BREWING CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate MOLSON COORS BREWING CO (TAP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, expanding profit margins, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MOLSON COORS BREWING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, MOLSON COORS BREWING CO increased its bottom line by earning $3.06 versus $2.43 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $3.06).
  • 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 119.2% when compared to the same quarter one year prior, rising from $60.00 million to $131.50 million.
  • 44.16% is the gross profit margin for MOLSON COORS BREWING CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.78% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that TAP's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs. 
  • You can view the full analysis from the report here: TAP Ratings Report

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