Molson Coors Earnings Preview: EPS and Sales Growth Expected

Molson Coors

is scheduled to report fourth-quarter 2011 results tomorrow, February 16, before the opening bell. Coors Light recently passed Budweiser as the number two best-selling beer in the U.S. And the brewer's MillerCoors venture said it would acquire Crispin Cider Company, offering it a share in the fast-growing hard cider market. But will investors get some good news from the earnings report? Analysts on average predict that the company will post per-share earnings that are 7.0% higher than a year ago to $0.71 for the quarter, and that revenue totaled $927.6 million. That would be a year-over-year revenue increase of 11.1%. That EPS estimate is a penny higher than 60 days ago. But note that the brewer's per-share earnings fell short of consensus estimates in the past four quarters -- by 8.8% in the third quarter. Looking back to the third quarter, Molson Coors said its net income decreased 11.2% year over year to $212.4 million, or $1.14 per diluted share. Net sales increased 9.1% to $954.4 million. The company attributed the disappointing EPS results in part to unemployment among core beer consumers and significant commodity inflation. For the full year, the consensus forecast calls for $3.51 per share earnings on revenue of $3.5 billion. That compares to $3.56 per share and $3.3 billion last year. In this case, the EPS estimate is the same as 60 days ago.

Molson Coors Brewing Company, one of the world's largest beer brewers, was formed in 2005 by the merger of Adolph Coors Company and Molson. The company also brews or distributes products under license from various third parties, including Heineken, Corona, Miller, Leinenkugel and many others. The company is headquartered in Denver, and it is an S&P 500 component with a market cap of $7.9 billion. Competitors include Anheuser-Busch InBev

, Boston Beer

and Companhia de Bebidas das Americas AmBev

. Anheuser-Busch reports on March 8 and Boston Beer on February 22. Analysts expect to see EPS growth for the fourth quarter and the full year from both of them.

During the three months that ended in December, Molson Coors said it repurchased 6.3 million shares for $271 million as part of its ongoing buyback program. Its Tenth and Blake division continued its so-called craft beer strategy to take on Boston Beer. But the stock also fell to a 52-week low.

The P/E ratio is less than the industry average, but so is the company's operating margin. The dividend yield is 2.9% and the return on equity is only 7.9%. Short interest is 1.4% of the float, but out of nine analysts polled who follow the stock, only two currently recommend buying it. Their mean price target on the shares is hardly any higher than the current share price. Shares have traded mostly between $43 and $45 since mid December. The 50-day moving average crossed above the 200-day moving average last week. The share price is about the same as it was both at the beginning of this year as well as a year ago. The 52-week range is $37.99 and $49.58. The stock has underperformed Anheuser-Busch and Boston Beer, as well as the broader markets, over the past six months.