Molson Coors Earnings: Efficiency Gains Buoy Profits but Premiumization Efforts in Early Phase

No-moat Molson Coors posted good second-quarter results, with resilient performance in the US and steady operational efficiency gains that eased investor anxiety about the brewer’s prospects amid a consumer pullback. Sales of $3.3 billion were flat in constant currency (against a tough comparison of 12% a year ago), while adjusted earnings per share of $1.92 grew 8% thanks to operating efficiency gains. Shares rose 7% on the report but remain undervalued relative to our $70 fair value estimate, which we plan to maintain. We see no change to our 2024 estimates for sales and adjusted EPS to grow 1% and 4%, respectively, or our 10-year projections for low-single digit sales growth and low-teen average operating margins.