In this video, Chuck Carnevale, co-founder of FAST Graphs, aka Mr. Valuation analyzes Molson Coors Beverage Company (TAP) using the FAST Graphs tool. What’s Brewing with Molson Coors? Inspired by a subscriber’s request, Chuck demonstrates how to evaluate a stock using financial metrics such as FUN Graphs, Fiscal Fitness, and financial statements. He starts by examining the company’s fundamentals, focusing on operating earnings and P/E ratios, highlighting a significant drop in earnings during the Great Recession and COVID-19, followed by a dividend cut in 2019. The video stresses the importance of valuation in determining stock opportunities, noting that overpaying for a stock can lead to substantial losses, even with strong earnings and dividend growth.
Chuck discusses Molson Coors’ valuation at a blended P/E of 8.38, emphasizing that buying at a low valuation could yield a 34% annualized return through 2027. He also contrasts the company’s performance against historical P/E norms and explains that adjusted operating earnings offer a clearer picture than diluted GAAP earnings. The analysis also covers cash flow, share buybacks, and profitability metrics, with a focus on the company’s free cash flow covering dividends, and how share buybacks were well-timed when the stock price was low.
Chuck then passes the analysis to his son, Colton, who examines Molson Coors’ financial statements to identify reasons behind negative net income, particularly during 2020 and 2022. Colton points to an unusual goodwill impairment charge in 2020 and rising costs of goods sold in 2022, which affected profitability. Despite these setbacks, Colton notes that the company has recovered with normalized financials in recent years. The video concludes by reaffirming that Molson Coors is currently undervalued, with potential for strong returns if purchased at its current price. Chuck encourages viewers to use FAST Graphs to dive deeper into stocks and make more informed investment decisions.
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Disclosure: No position.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.
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