COMPANY DESCRIPTION
Molson Coors Brewing is a brewer and has a portfolio of owned and partner brands. Co. operates the following segments: Canada, which consists of Co.'s production, marketing and sales of the Molson brand family; the U.S., which consists of Co.'s interest, and results from its interest, in MillerCoors LLC, its joint venture with SABMiller for all U.S. operations; Europe, which consists of Co.'s production, marketing and sales of its brands in the U.K., Ireland and Central Europe; and Molson Coors International, which is comprised of Co.'s business and brand portfolio in markets, including emerging markets, outside the U.S., Canada, U.K. and Central Europe.
ECONOMIC MOAT
Molson Coors economic moat is dug from its strong brand portfolio. Strong brand names allow the firm to offset volume declines with price increases. Relationships with national distributors allowing the firm to get better placement on retail shelves than smaller brewers. The company also has significantly more resources to use for advertising its craft portfolio than smaller craft competitors.
OUTLOOK
Molson Coors will probably start 2015 with a soft showing. Unfavorable foreign exchange rates will likely hurt results given TAP's global footprint. Business should pick up, particularly in North America, as TAP heads into peak sales season in the months ahead. Coors Light and Blue Moon ought to be strong performers. The company announced a share-repurchase program. It is authorized to buy back up to $1 billion worth of stock within the next four years. Note that the board also raised its quarterly dividend payout 11%, to $0.41 a share. All told, it appears management is rewarding stockholders for their recent patience.
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STRENGTHS
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Leading position in its core markets
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Diversified sources of supply
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Strong brewery and distribution warehouse network in its core markets
WEAKNESSES
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Reliance on few brands for majority of revenues
THREATS
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Stringent advertising regulations to control irresponsible portrayal of alcoholic drinks Intense competition
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Increasing labor wages
OPPORTUNITIES
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Entry into the craft beer business amidst rising demand globally
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Shifting consumer preferences towards low-alcohol beer
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
