Molson Coors Equity Evaluation Nathan Dormann
[email protected] Josh Lantz
[email protected] Jacqueline Otieno
[email protected] David Haley
[email protected] Ravi Patel
[email protected] 1 Molson Coors Brewing Company Equity Evaluation Table of Contents Executive Summary 1 Molson Coors Firm Overview 3 Industry Structure and Profitability Overview 5 Accounting Analysis 13 Financial Statement Ratio Analysis 23 Forecasting 31 Valuation Analysis 34 Valuation Results 40 Appendices 42 References 53 2 Investment Recommendation: Overvalued, HOLD 11/01/2006 Ticker Symbol TAP EPS Forecast S&P 500 Price 71.4 2005 2006 2007 2008 1.7 3.29 3.68(e) 3.82(e) 52 Week Range 60.45-74.10 Intrinsic Valuations Market Cap 6.24B Actual Price $71 Shares Outstanding 86,280,000 Residual Income $62 Divedend Yield 1.28% AEG $61 Average Book Value 6.8 LRRI $69 ROE 2.50% Beta 1 ROA 1.10% R2 0.1 3 Executive Summary Molson Coors has been brewing the finest quality beers for people around the world for almost two centuries now. It is no wonder that Molson Coors is the third largest brewer in the United States and fifth largest brewer in the world. By producing the finest quality beers Molson Coors has created a loyal and dedicated customer base. Only recently did Coors merge with Molson to create one of the largest and oldest brewing companies in the world. But Coors has been expanding their market share through acquisitions and internal growth for years before the merger. Molson Coors competes in an industry with few true competitors, with Anheuser Busch and Miller being the only real challengers to Molson Coors market share.