Molson Coors: Zacks’ Bull of the Day Play

With another Mother’s Day in the books, my calendar turns towards the official kick-off of summertime, Memorial Day. Summer for me means boats, street festivals, baseball, and of course beer. Today’s Bull of the Day is a beer company that’s the love child of two very famous brands from two very famous countries.

Molson Coors Brewing Company (TAPAnalyst Report) is the world’s fifth-largest global brewer and it’s about to get bigger. The company recently announced that they’ll acquire full ownership of MillerCoors, their partnership with SAB Miller. President and CEO Mark Hunter commented on the deal saying, “The transaction is a game-changing opportunity for Molson Coors and advances our ambition to be the first choice for consumers and customers. MillerCoors is a business we know very well – its strategy, culture, brands and people – and we look forward to meeting and exceeding the needs of our valued distributor partners and consumers across the US.”

I like it because it’s a Zacks Rank #1 (Strong Buy). The bullishness comes not only from a recent boost in the current year consensus but also a huge move in next year’s numbers. We’ve seen the current year Zacks Consensus Estimate jump from $3.19 to $3.29 as three analysts have increased their earnings estimates. Next year’s number has gone from $4.05 to $5.38. Looks like the MillerCoors acquisition is likely to be accretive to next year’s earnings.

The company is coming off a big beat last quarter with EPS coming in at 54 cents versus our Zacks Consensus Estimate calling for 43 cents. That’s coming off the heels of a disappointing quarter where the company missed by 3 cents.

The stock has rallied as a result of the bullish sentiment on Wall Street. After failing to close above $95 into the end of last year, shares retreated with the broad market, testing $80 in mid-February. From there, shares caught a strong bid and have been riding that move ever since. Yesterday shares closed just shy of the century mark at $99.94. With the Commodity Channel Index overbought at 138 I’d wait for a pullback. I think it’s a less risky scenario than trying to play a breakout above $100.

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