BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUSINESS DESCRIPTION Molson Coors Brewing Company manufactures and sells beer and other beverage products in the United States, Canada, Europe, and internationally. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change -7.56-18.44-5.89 GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues 204.26 211.96 36.64 Net Income 38.27 293.30 59.09 EPS 37.23 279.48 51.32 RETURN ON EQUITY (%) Ind Avg S&P 500 Q3 2017 17.95 16.22 13.41 Q3 2016 5.77 15.46 11.79 Q3 2015 5.72 12.44 12.91 P/E COMPARISON BUY Sub-Industry: BUY RATING SINCE 08/03/2011 TARGET PRICE $96.10 Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY Volume in Thousands 2015 2016 2017 COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History TARGET PRICE $96.10 110 105 100 95 90 85 80 75 3 0 8.03 EPS ALYSIS¹ ($) 35.27 Ind Avg 24.99 S&P 500 RECOMMENDATION We rate () a BUY. This is driven by some important positives, which we believe should have a greater impact than any nesses, 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 robust revenue growth, notable return on equity, reasonable valuation levels, expanding profit margins and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows operating cash flow. HIGHLIGHTS 's very impressive revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues leaped by 204.3%. Growth in the company's revenue appears to have helped boost the earnings per share. Q1 0.42 Q2 1.23 Q3 0.07 2015 Q4 0.18 Q1 0.80 Q2 0.81 Q3 0.94 2016 = not available NM = not meaningful Q4 6.65 Q1 0.93 Q2 1.49 Q3 1.29 2017 1 Compustat fiscal year convention is used for all fundamental data items. The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Beverages industry and the overall market, 's return on equity exceeds that of both the industry average and the S&P 500. The gross profit margin for is rather high; currently it is at 51.89%. It has increased from the same quarter the previous year. Regardless of the results of the gross profit margin, the net profit margin of 9.71% trails the industry average. has improved earnings per share by 37.2% 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, increased its bottom line by earning $9.20 versus $1.90 in the prior year. For the next year, the market is expecting a contraction of 53.3% in earnings ($4.30 versus $9.20). PAGE 1
PEER GROUP ALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -25% 225% UNFAVORABLE COKE KOF 5% BREW EBITDA Margin (TTM) CCU SAM TAP FAVORABLE BF.B KO BF.A 40% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $377.3 Million and $195.1 Billion. Companies with or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -25% 225% UNFAVORABLE COKE KOF CCU BREW ABEV BF.A BF.B SAM KO 0% Earnings Yield (TTM) TAP FAVORABLE 14% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -12.1% and 212%. Companies with or NM values do not appear. INDUSTRY ALYSIS The US beverage industry is broadly divided into alcoholic and non-alcoholic segments. The alcoholic segment includes beer, wine, and spirits. The non-alcoholic segment includes carbonated soft drinks (CSDs), fruit beverages, bottled water, milk, sports drinks, energy drinks, ready-to-drink (RTD) tea, and RTD coffee. The industry has around 4000 manufactures and distributors generating upwards of $140 billion in annual revenue. The industry is highly competitive on pricing, packaging, marketing, and developing new products. The two biggest players are Coca-Cola (KO) and PepsiCo (PEP), which together hold more than 50% of the market. The non-alcoholic beverage segment represents 60% of the market. Premium wineries revenue has registered annual growth of 8% over recent years and energy drink volume continues to surge. Faced with limited volume growth in developed markets, high-growth developing markets are increasingly important to the bottom line. Mergers, acquisitions, and partnerships are on the rise as food and drink brands look to establish or expand their presence in international markets. PepsiCo and Pepsi Bottling Group Inc. acquired a 75% stake in Russia s Lebedyansky JSC for around $2.0 billion in March 2008 and Coca-Cola bid $2.3 billion for China Huiyuan Juice Group Ltd. in September 2008. Health and convenience remain major challenges and play a significant role in shaping product strategies. Beverages have been in the spotlight over the last five years because of research that links ingredients, such as sugars and acids, with prevalent chronic diseases, such as obesity, diabetes, and dental decay. Rising environmental concerns also present a challenge. The production, distribution, and sale of beverages in the United States are subject to the Federal Food, Drug, and Cosmetic Act, the Dietary Supplement Health and Education Act of 1994, and the Occupational Safety and Health Act. These acts, various environmental statutes, and numerous other federal, state, and local statutes are applicable to the production, transportation, sale, safety, advertisement, and ingredients. Industry fragmentation also poses a major threat. To overcome this, companies are acquiring smaller players or developing independent plants. Coca-Cola s Monster distribution will help bottlers realize economies of scale in their direct store distribution system. PEER GROUP: Beverages Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) 83.20 15,700 8.03 10,717.20 2,243.00 ABEV AMBEV SA 6.35 99,807 35.28 14,409.93 2,760.30 CCU COMPANIA CERVECERIAS UNIDAS 26.76 4,944 24.78 2,578.98 199.18 BREW CRAFT BREW ALLIANCE INC 19.55 377 651.67 205.86 0.57 KOF COCA-COLA FEMSA SAB DE CV 68.90 3,619 20.15 10,727.06 711.94 BF.A BROWN FORMAN CORP 59.10 22,660 32.83 3,056.00 703.00 BF.B BROWN FORMAN CORP 58.87 22,660 32.71 3,056.00 703.00 KO COCA-COLA CO 45.78 195,053 43.60 37,307.00 4,550.00 TAP 79.32 15,700 7.66 10,717.20 2,243.00 SAM BOSTON BEER INC 178.55 1,547 24.36 876.04 90.69 COKE COCA-COLA BTLNG CONS 207.42 1,481 48.35 4,039.08 40.01 The peer group comparison is based on Major Brewers companies of comparable size. PAGE 2
Annual Dividend Rate COMPANY DESCRIPTION Molson Coors Brewing Company manufactures and sells beer and other beverage products in the United States, Canada, Europe, and internationally. It sells various products under the Coors Light, Miller Lite, Coors Banquet, the Blue Moon Brewing Company brands, the Jacob Leinenkugel Brewing Company brands, Keystone, Icehouse, Mickey's, Miller 64, Miller Genuine Draft, Miller High Life, Milwaukee's Best, Hamm's, Olde English 800, Steel Reserve, Crispin, Smith & Forge, Redd's, the Henry's Hard Soda, and Steel Reserve Alloy Series brands. The company also offers various brands, including Molson Canadian, Belgian Moon, Carling, Carling Black Label, Creemore Springs, the Granville Island, Mad Jack, the Miller, Molson Canadian 67, Molson Canadian Cider, Molson Dry, Molson Export, Old Style Pilsner, and the Rickard's family of brands. In addition, it provides its products under the Staropramen, Apatinsko, Astika, Bergenbier, Borsodi, Branik, Jelen, Kamenitza, Niksicko, Noroc, Ostravar, Ozujsko, Sharp's Doom Bar, Worthington's, Cobra, and other brand names. Further, the company imports and sells Hop Valley, Revolver, Saint Archer, Terrapin, Grolsch, Peroni Nastro Azzurro, Pilsner Urquell, Desperados, Dos Equis, Moretti, Sol, Tecate, Carling Strong, Coors, Coors 1873, Coors Extra, Coors Gold, Iceberg 9000, King Cobra, Thunderbolt, and Zima brand products. Additionally, it brews or distributes various brands, such as Amstel Light, Heineken, Murphy's, Newcastle Brown Ale, Strongbow cider, Beck's, Belle-Vue Kriek brands, Hoegaarden, Leffe, Lowenbrau, Lowenweisse, Spaten and Stella Artois, Corona Extra, Rekorderlig, Singha, Blue Moon, Corona, Miller High Life, Molson Canadian, and other Modelo brands, as well as George Killian's Irish Red, the Redd's, and Foster's brands. The company was formerly known as Adolph Coors Company and changed its name to Molson Coors Brewing Company in February 2005. The Company was founded in 1786 and is headquartered in Denver, Colorado. 1801 California Street, Suite 4600 Denver, CO 80202 USA Phone: 303-927-2337 http://www.molsoncoors.com STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 4.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 70% of the stocks we rate. Total Return 1.5 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 20% of the companies we cover. Efficiency 4.0 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 70% of the companies we review. Price volatility 2.5 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 40% of the stocks we monitor. Solvency 4.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 70% of the companies we analyze. Income 4.0 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 70% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3
Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial 0.54 4.30 4.74 INCOME STATEMENT Net Sales ($mil) 2,883.20 947.60 EBITDA ($mil) 727.50 208.20 EBIT ($mil) 526.30 144.60 Net Income ($mil) 280.00 202.50 FINCIAL ALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 has increased when compared to the same period a year ago. The company grew its sales and net income significantly quarter versus same quarter a year prior, and was able to outpace the average competitor in the industry when comparing revenue growth, but not when comparing net income growth. MOLSON COORS BREWING CO has very liquidity. Currently, the Quick Ratio is 0.47 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow. At the same time, stockholders' equity ("net worth") has greatly increased by 25.89% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit www.thestreetratings.com. BALANCE SHEET Cash & Equiv. ($mil) 971.30 9,981.50 Total Assets ($mil) 30,677.70 22,196.80 Total Debt ($mil) 12,319.20 9,887.60 Equity ($mil) 12,488.20 9,919.50 PROFITABILITY Gross Profit Margin 51.89% 48.55% EBITDA Margin 25.23% 2 Operating Margin 18.25% 15.26% Sales Turnover 0.35 0.15 Return on Assets 7.31% 2.56% Return on Equity 17.95% 5.77% DEBT Current Ratio 0.69 6.82 Debt/Capital 0.50 0.50 Interest Expense 72.60 27.30 Interest Coverage 7.25 5.30 SHARE DATA Shares outstanding (mil) 215 215 Div / share 0.41 0.41 EPS 1.29 0.94 Book value / share 57.98 46.16 Institutional Own % Avg Daily Volume 61 56 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4
RATINGS HISTORY Our rating for has not changed since 8/3/2011. As of 11/21/2017, the stock was trading at a price of which is 30.4% below its 52-week high of $119.49 and 4.2% above its 52-week low of $79.86. 2 Year Chart BUY: $93.17 2016 $110 $100 $90 MOST RECENT RATINGS CHANGES Date Price Action From To 11/20/15 $93.17 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/21/2017) 43.99% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months. 30.68% Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss. 25.33% Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY 10005 www.thestreet.com Research Contact: 212-321-5381 Sales Contact: 866-321-8726 VALUATION BUY. 's P/E ratio indicates a significant discount compared to an average of 35.27 for the Beverages industry and a significant discount compared to the S&P 500 average of 24.99. For additional comparison, its price-to-book ratio of 1.44 indicates a significant discount versus the S&P 500 average of 3.18 and a significant discount versus the industry average of 8.40. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings 8.03 Peers 35.27 Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. Price/Projected Earnings 17.55 Peers 26.32 Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. Price/Book 1.44 Peers 8.40 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. Price/Sales 1.67 Peers 4.57 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. industry on this measurement. DISCLAIMER: Price/CashFlow 10.91 Peers 21.63 Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. Price to Earnings/Growth NM Peers 1.07 Neutral. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. 's negative PEG ratio makes this valuation measure meaningless. Earnings Growth lower higher 279.48 Peers 17.73 Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. is expected to have an earnings growth rate that significantly exceeds its Sales Growth lower higher 211.96 Peers 17.96 Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share. has a sales growth rate that significantly exceeds its The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at http://www.thestreet.com/static/about/terms-of-use.html. PAGE 5