Molson Coors Beverage Company TAP stock has been doing well, recording 7% growth in the past six months. However, the Zacks Beverages - Alcohol industry and the broader Consumer Staples sector have dropped 16.6% and 4.4%, respectively, in the same time frame.

The company is strictly focused on portfolio premiumization, in both Beer and Beyond Beer, to boost its product portfolio. TAP has also been making impressive innovations, especially in Beyond Beer.

More on TAP’s Strategies

Molson Coors’ Acceleration Plan had been built upon the success accomplished under its Revitalization Plan implemented in 2019. The plan is expected to deliver growth in the coming years. This initiative revolves around five pillars, including core power brands’ growth, portfolio premiumization, beyond beer expansion, investment in capabilities and support to its people and communities.

The company intends to invest in iconic brands and growth opportunities in the above-premium beer space, expand in adjacencies and beyond beer, and create digital competencies for commercial functions, supply-chain-related system capabilities and employees. The company is also building on the strength of its iconic core brands.

We note that the better-for-you energy drinks sales have been outperforming the broader category, which leads to ZOA’s high-growth potential. ZOA’s direct-to-consumer business is a key sales driver. We expect the ZOA brand to tap extra sales to Molson Coors’ portfolio and increase its profitability.

TAP Price Performance

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Molson Coors’ Headwinds

However, Molson Coors has been struggling with cost inflation associated with materials and manufacturing expenses. In third-quarter 2024, the underlying cost of goods sold per hectoliter rose 5.6% on a reported basis, mainly owing to cost inflation for materials and manufacturing costs, deleveraged volumes and unfavorable mix on lower contract brewing volumes in the Americas segment, somewhat offset by cost savings.

In addition, the company has been witnessing pressures of lower U.S. brand volumes, with the U.S. beer industry underperforming expectations.

TAP Stock’s Attractive Valuation

Molson Coors’ stock is trading at a discount valuation relative to the industry. Going by the price/earnings ratio, the stock currently trades at 9.34 on a forward 12-month basis, lower than 14.23 of the industry. Also, the stock is trading lower than its five-year high of 15.57.

Final Words on TAP Stock

There is no doubt that the stock is attractively valued and robust strategies speak of major tailwinds for Molson Coors. However, the aforesaid challenges remain concerns.

Nevertheless, Molson Coors currently carries a Zacks Rank #3 (Hold). For 2025, the Zacks Consensus Estimate for earnings per share (EPS) indicates a 2.8% year-over-year increase.

Stocks to Consider in Consumer Staples Space

Freshpet, Inc. FRPT, a pet food company, delivered a trailing four-quarter average earnings surprise of 144.5%. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.5% and 66.8%, respectively, from the prior-year levels. 

United Natural Foods UNFI, a key distributor of natural, organic and specialty food and non-food products, currently sports a Zacks Rank of 1.

The consensus estimate for United Natural Foods’ current financial-year sales and EPS indicates growth of 0.3% and 442.9%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter average earnings surprise of 553.1%. 

McCormick & Company MKC, manufacturer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2 (Buy). MKC delivered a trailing four-quarter average earnings surprise of 13.8%. 

The Zacks Consensus Estimate for MKC’s current financial-year sales and EPS indicates growth of 2.3% and 6.4%, respectively, from the year-ago figures.    

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Molson Coors Beverage Company (TAP) : Free Stock Analysis Report

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