Molson Coors Beverage Company TAP has encountered a notable resistance level, prompting caution among investors from a technical standpoint. TAP has been trading below both the 200-day and 50-day simple moving averages (SMA) for quite some time now, suggesting a bearish trend.

Currently, at $55.19, TAP remains below its 200-day and 50-day SMA of $56.01 and $58.92, respectively, indicating a possible sustained downward trend.

TAP Trading Below 50- and 200-Day Moving Average

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TAP faced significant headwinds recently, underperforming the Zacks Beverages - Alcohol industry. In the past month, TAP's shares have declined 10.4% compared with the industry's decline of 8.8%, highlighting company-specific challenges.

TAP Stock's Past Month Performance

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Factors Behind Molson Coors’ Stock Decline

Molson Coors’ Americas segment has faced significant challenges in 2024, driven by tough macroeconomic conditions in the U.S. beer industry. These pressures, coupled with unfavorable shipment timings and the wind-down of a contract brewing agreement, led to a 17.9% decline in U.S. financial volumes during the third quarter’s peak selling season.

U.S. brand volumes also fell by 6.2%, reflecting the cycling of last year’s strong growth in core power brands and lower sales in the above-premium category. As a result, sales for the Americas segment declined 11% year-over-year, with financial volumes down 15.6% and brand volumes decreasing by 5.4%.

However, some of this softness was offset by growth in Canadian brand volumes. In response to these challenges, management has adjusted its 2024 net sales revenue guidance, shifting from expectations of growth to an anticipated decline, highlighting the ongoing impact of macroeconomic headwinds on its operations.

Molson Coors’ performance has been impacted by the exit of a contract brewing agreement with Pabst, which is set to conclude by the end of 2024. The departure of these brands from the company's brewery network has affected financial volumes, with the impact growing over time. This has contributed to declines in the Americas segment's total volumes and net sales revenues, creating a notable headwind to overall performance. Management anticipates that the termination of the agreement will continue to weigh on results in the near term, further challenging the company's financial and operational metrics.

Do TAP’s Strategic Initiatives Hold Potential?

Molson Coors is progressing with its revitalization plan to achieve sustainable top-line growth by streamlining its organization and reinvesting in its brands and capabilities. The company is focused on strengthening its iconic core brands while expanding into high-margin segments like above-premium beer and exploring adjacent categories beyond beer.

It is also enhancing digital competencies across commercial functions, supply chain systems and employee capabilities. Additionally, Molson Coors remains committed to its cost-savings program, announced in 2020, which aims to deliver $600 million in savings over a few years to support these growth initiatives. These efforts are designed to drive innovation, efficiency and long-term market competitiveness.

The EMEA & APAC region has been a key driver of Molson Coors’ global premiumization strategy, with more than 50% of its net brand revenues now coming from above-premium products. Madri's impressive growth of more than 15% in the third quarter is a prime example of how the company has successfully built a premium portfolio in these regions.

Final Words on TAP Stock

Shares of Molson Coors have faced headwinds, underperforming the broader industry due to challenging macroeconomic conditions in the United States and a decline in U.S. financial volumes during the peak season. These factors warrant caution for short-term investors.

However, the company’s strategic initiatives, including its revitalization plan, focus on above-premium beer and expansion into adjacent categories beyond beer, positioning it for long-term growth. The recent decline in stock price could present an attractive entry point for potential investors. That said, with margins still in recovery, some caution is advisable. Currently, Molson Coors has a Zacks Rank #3 (Hold).

Don’t Miss These Solid Bets

We have highlighted some better-ranked stocks from the broader Consumer Staples space, namely Freshpet, Inc. FRPT, Vita Coco Company COCO and Constellation Brands STZ 

Freshpet, together with its subsidiaries, manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently sports a Zacks Rank #1 (Strong Buy). FRPT delivered an earnings surprise of 144.5% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Freshpet’s current fiscal year’s sales and earnings implies growth of 27.2% and 228.6%, respectively, from the year-ago reported number.

Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank of 2 (Buy). COCO has a trailing four-quarter earnings surprise of 17.6%, on average.

The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.8% and 29.7%, respectively, from the year-ago reported figures.

Constellation Brands together with its subsidiaries produces, imports, markets, and sells beer, wine, and spirits. It currently has a Zacks Rank #2 (Buy). STZ has a trailing four-quarter earnings surprise of 5.3%, on average.

The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales and earnings suggests growth of 4.1% and 12.8%, respectively, from the year-ago reported numbers.

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