Molson Coors Earnings: Weak US Sales, but International Performance Better on Premiumization

We plan to cut our $65 fair value estimate for no-moat Molson Coors by a low-single-digit percentage after absorbing weak third-quarter results. Sales slumped 8% on a 16% US volume contraction, while adjusted net profit fell 10% on expense deleverage. As the brewer’s flat sales in the first nine months track behind our 1% projection for the full year, and US performance is not likely to pick up in the fourth quarter, we plan to cut our 2024 forecasts for sales growth to negative 1% and for adjusted earnings per share to low-single-digit growth (from 4%). Our 10-year projections for 1% annual sales growth and 13% operating margin remain in place. The shares would still appear undervalued after our intended fair value estimate cut.