Intrinsic value of Molson Coors Brewing Cl B - TAP

Previous Close

$89.02

  Intrinsic Value

$156.77

stock screener

  Rating & Target

str. buy

+76%

  Value-price divergence*

+26%

Previous close

$89.02

 
Intrinsic value

$156.77

 
Up/down potential

+76%

 
Rating

str. buy

 
Value-price divergence*

+26%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TAP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 19.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  36.91
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  4,885
  7,816
  12,076
  18,059
  26,203
  36,969
  50,823
  68,220
  89,577
  115,264
  145,588
  180,787
  221,029
  266,415
  316,981
  372,713
  433,555
  499,419
  570,199
  645,780
  726,048
  810,900
  900,245
  994,017
  1,092,172
  1,194,696
  1,301,602
  1,412,936
  1,528,772
  1,649,215
  1,774,400
Variable operating expenses, $m
 
  6,180
  9,098
  13,198
  18,777
  26,153
  35,645
  47,564
  62,196
  79,794
  100,569
  123,860
  151,431
  182,525
  217,169
  255,352
  297,035
  342,160
  390,652
  442,434
  497,427
  555,560
  616,772
  681,016
  748,264
  818,505
  891,748
  968,025
  1,047,386
  1,129,903
  1,215,669
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,576
  6,180
  9,098
  13,198
  18,777
  26,153
  35,645
  47,564
  62,196
  79,794
  100,569
  123,860
  151,431
  182,525
  217,169
  255,352
  297,035
  342,160
  390,652
  442,434
  497,427
  555,560
  616,772
  681,016
  748,264
  818,505
  891,748
  968,025
  1,047,386
  1,129,903
  1,215,669
Operating income, $m
  3,309
  1,636
  2,977
  4,862
  7,426
  10,816
  15,179
  20,656
  27,381
  35,470
  45,018
  56,927
  69,599
  83,890
  99,812
  117,362
  136,520
  157,259
  179,547
  203,346
  228,621
  255,340
  283,473
  313,000
  343,908
  376,191
  409,854
  444,911
  481,386
  519,312
  558,731
EBITDA, $m
  3,697
  3,124
  4,827
  7,219
  10,475
  14,778
  20,317
  27,271
  35,809
  46,077
  58,199
  72,270
  88,357
  106,500
  126,713
  148,993
  173,314
  199,643
  227,938
  258,151
  290,239
  324,158
  359,874
  397,359
  436,597
  477,581
  520,317
  564,823
  611,128
  659,275
  709,318
Interest expense (income), $m
  163
  403
  766
  1,294
  2,037
  3,048
  4,385
  6,105
  8,265
  10,916
  14,105
  17,870
  22,239
  27,235
  32,870
  39,148
  46,067
  53,620
  61,797
  70,584
  79,967
  89,932
  100,466
  111,558
  123,199
  135,385
  148,113
  161,385
  175,207
  189,588
  204,540
Earnings before tax, $m
  3,035
  1,234
  2,212
  3,567
  5,389
  7,768
  10,794
  14,552
  19,117
  24,554
  30,913
  39,057
  47,359
  56,654
  66,942
  78,214
  90,453
  103,639
  117,750
  132,762
  148,654
  165,408
  183,007
  201,442
  220,708
  240,806
  261,741
  283,526
  306,179
  329,724
  354,190
Tax expense, $m
  1,050
  333
  597
  963
  1,455
  2,097
  2,914
  3,929
  5,162
  6,630
  8,347
  10,546
  12,787
  15,297
  18,074
  21,118
  24,422
  27,983
  31,793
  35,846
  40,137
  44,660
  49,412
  54,389
  59,591
  65,018
  70,670
  76,552
  82,668
  89,026
  95,631
Net income, $m
  1,976
  901
  1,615
  2,604
  3,934
  5,670
  7,879
  10,623
  13,955
  17,924
  22,567
  28,512
  34,572
  41,358
  48,868
  57,096
  66,031
  75,657
  85,958
  96,916
  108,518
  120,748
  133,595
  147,053
  161,117
  175,788
  191,071
  206,974
  223,511
  240,699
  258,559

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  573
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  29,342
  45,976
  71,034
  106,231
  154,136
  217,463
  298,961
  401,294
  526,924
  678,023
  856,399
  1,063,453
  1,300,173
  1,567,145
  1,864,594
  2,192,431
  2,550,324
  2,937,759
  3,354,111
  3,798,706
  4,270,873
  4,769,998
  5,295,558
  5,847,156
  6,424,540
  7,027,622
  7,656,484
  8,311,389
  8,992,776
  9,701,264
  10,437,646
Adjusted assets (=assets-cash), $m
  28,769
  45,976
  71,034
  106,231
  154,136
  217,463
  298,961
  401,294
  526,924
  678,023
  856,399
  1,063,453
  1,300,173
  1,567,145
  1,864,594
  2,192,431
  2,550,324
  2,937,759
  3,354,111
  3,798,706
  4,270,873
  4,769,998
  5,295,558
  5,847,156
  6,424,540
  7,027,622
  7,656,484
  8,311,389
  8,992,776
  9,701,264
  10,437,646
Revenue / Adjusted assets
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
Average production assets, $m
  12,439
  19,900
  30,745
  45,979
  66,713
  94,122
  129,397
  173,688
  228,063
  293,462
  370,666
  460,284
  562,741
  678,292
  807,033
  948,928
  1,103,831
  1,271,521
  1,451,726
  1,644,156
  1,848,519
  2,064,550
  2,292,023
  2,530,766
  2,780,670
  3,041,695
  3,313,880
  3,597,335
  3,892,253
  4,198,901
  4,517,622
Working capital, $m
  -988
  -782
  -1,208
  -1,806
  -2,620
  -3,697
  -5,082
  -6,822
  -8,958
  -11,526
  -14,559
  -18,079
  -22,103
  -26,641
  -31,698
  -37,271
  -43,356
  -49,942
  -57,020
  -64,578
  -72,605
  -81,090
  -90,024
  -99,402
  -109,217
  -119,470
  -130,160
  -141,294
  -152,877
  -164,921
  -177,440
Total debt, $m
  12,073
  21,874
  36,983
  58,207
  87,094
  125,280
  174,424
  236,130
  311,885
  402,998
  510,558
  635,412
  778,154
  939,139
  1,118,500
  1,316,186
  1,531,995
  1,765,619
  2,016,679
  2,284,770
  2,569,486
  2,870,459
  3,187,372
  3,519,985
  3,868,148
  4,231,806
  4,611,010
  5,005,918
  5,416,794
  5,844,012
  6,288,050
Total liabilities, $m
  17,923
  27,724
  42,833
  64,057
  92,944
  131,130
  180,274
  241,980
  317,735
  408,848
  516,408
  641,262
  784,004
  944,989
  1,124,350
  1,322,036
  1,537,845
  1,771,469
  2,022,529
  2,290,620
  2,575,336
  2,876,309
  3,193,222
  3,525,835
  3,873,998
  4,237,656
  4,616,860
  5,011,768
  5,422,644
  5,849,862
  6,293,900
Total equity, $m
  11,419
  18,253
  28,200
  42,174
  61,192
  86,333
  118,688
  159,314
  209,189
  269,175
  339,990
  422,191
  516,169
  622,157
  740,244
  870,395
  1,012,479
  1,166,290
  1,331,582
  1,508,086
  1,695,537
  1,893,689
  2,102,337
  2,321,321
  2,550,543
  2,789,966
  3,039,624
  3,299,621
  3,570,132
  3,851,402
  4,143,745
Total liabilities and equity, $m
  29,342
  45,977
  71,033
  106,231
  154,136
  217,463
  298,962
  401,294
  526,924
  678,023
  856,398
  1,063,453
  1,300,173
  1,567,146
  1,864,594
  2,192,431
  2,550,324
  2,937,759
  3,354,111
  3,798,706
  4,270,873
  4,769,998
  5,295,559
  5,847,156
  6,424,541
  7,027,622
  7,656,484
  8,311,389
  8,992,776
  9,701,264
  10,437,645
Debt-to-equity ratio
  1.057
  1.200
  1.310
  1.380
  1.420
  1.450
  1.470
  1.480
  1.490
  1.500
  1.500
  1.510
  1.510
  1.510
  1.510
  1.510
  1.510
  1.510
  1.510
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
  1.520
Adjusted equity ratio
  0.377
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397
  0.397

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,976
  901
  1,615
  2,604
  3,934
  5,670
  7,879
  10,623
  13,955
  17,924
  22,567
  28,512
  34,572
  41,358
  48,868
  57,096
  66,031
  75,657
  85,958
  96,916
  108,518
  120,748
  133,595
  147,053
  161,117
  175,788
  191,071
  206,974
  223,511
  240,699
  258,559
Depreciation, amort., depletion, $m
  388
  1,488
  1,850
  2,358
  3,049
  3,962
  5,138
  6,615
  8,427
  10,607
  13,181
  15,343
  18,758
  22,610
  26,901
  31,631
  36,794
  42,384
  48,391
  54,805
  61,617
  68,818
  76,401
  84,359
  92,689
  101,390
  110,463
  119,911
  129,742
  139,963
  150,587
Funds from operations, $m
  987
  2,389
  3,464
  4,962
  6,983
  9,633
  13,018
  17,237
  22,382
  28,531
  35,747
  43,855
  53,330
  63,967
  75,769
  88,727
  102,825
  118,041
  134,348
  151,722
  170,135
  189,566
  209,996
  231,412
  253,806
  277,178
  301,534
  326,885
  353,253
  380,662
  409,146
Change in working capital, $m
  -140
  -293
  -426
  -598
  -814
  -1,077
  -1,385
  -1,740
  -2,136
  -2,569
  -3,032
  -3,520
  -4,024
  -4,539
  -5,057
  -5,573
  -6,084
  -6,586
  -7,078
  -7,558
  -8,027
  -8,485
  -8,935
  -9,377
  -9,816
  -10,252
  -10,691
  -11,133
  -11,584
  -12,044
  -12,518
Cash from operations, $m
  1,127
  2,682
  3,890
  5,560
  7,797
  10,709
  14,403
  18,977
  24,518
  31,100
  38,780
  47,375
  57,355
  68,506
  80,826
  94,300
  108,909
  124,627
  141,426
  159,280
  178,162
  198,051
  218,930
  240,789
  263,622
  287,430
  312,224
  338,019
  364,836
  392,706
  421,665
Maintenance CAPEX, $m
  0
  -415
  -663
  -1,025
  -1,533
  -2,224
  -3,137
  -4,313
  -5,790
  -7,602
  -9,782
  -12,356
  -15,343
  -18,758
  -22,610
  -26,901
  -31,631
  -36,794
  -42,384
  -48,391
  -54,805
  -61,617
  -68,818
  -76,401
  -84,359
  -92,689
  -101,390
  -110,463
  -119,911
  -129,742
  -139,963
New CAPEX, $m
  -342
  -7,461
  -10,845
  -15,234
  -20,734
  -27,409
  -35,274
  -44,291
  -54,375
  -65,399
  -77,204
  -89,617
  -102,457
  -115,551
  -128,742
  -141,895
  -154,903
  -167,690
  -180,206
  -192,429
  -204,363
  -216,031
  -227,473
  -238,743
  -249,903
  -261,026
  -272,184
  -283,456
  -294,918
  -306,648
  -318,721
Cash from investing activities, $m
  -12,287
  -7,876
  -11,508
  -16,259
  -22,267
  -29,633
  -38,411
  -48,604
  -60,165
  -73,001
  -86,986
  -101,973
  -117,800
  -134,309
  -151,352
  -168,796
  -186,534
  -204,484
  -222,590
  -240,820
  -259,168
  -277,648
  -296,291
  -315,144
  -334,262
  -353,715
  -373,574
  -393,919
  -414,829
  -436,390
  -458,684
Free cash flow, $m
  -11,160
  -5,194
  -7,618
  -10,699
  -14,470
  -18,924
  -24,008
  -29,628
  -35,647
  -41,901
  -48,207
  -54,598
  -60,445
  -65,803
  -70,526
  -74,495
  -77,625
  -79,857
  -81,163
  -81,540
  -81,007
  -79,598
  -77,361
  -74,355
  -70,641
  -66,284
  -61,350
  -55,900
  -49,993
  -43,683
  -37,019
Issuance/(repayment) of debt, $m
  9,195
  10,374
  15,109
  21,224
  28,887
  38,186
  49,144
  61,706
  75,755
  91,113
  107,560
  124,854
  142,742
  160,984
  179,361
  197,686
  215,809
  233,623
  251,061
  268,090
  284,717
  300,972
  316,913
  332,614
  348,163
  363,658
  379,204
  394,908
  410,877
  427,218
  444,038
Issuance/(repurchase) of shares, $m
  2,537
  5,933
  8,333
  11,369
  15,084
  19,471
  24,476
  30,003
  35,920
  42,062
  48,248
  53,689
  59,406
  64,630
  69,219
  73,055
  76,053
  78,155
  79,334
  79,588
  78,933
  77,405
  75,052
  71,932
  68,104
  63,635
  58,587
  53,023
  47,000
  40,571
  33,784
Cash from financing (excl. dividends), $m  
  11,671
  16,307
  23,442
  32,593
  43,971
  57,657
  73,620
  91,709
  111,675
  133,175
  155,808
  178,543
  202,148
  225,614
  248,580
  270,741
  291,862
  311,778
  330,395
  347,678
  363,650
  378,377
  391,965
  404,546
  416,267
  427,293
  437,791
  447,931
  457,877
  467,789
  477,822
Total cash flow (excl. dividends), $m
  483
  11,113
  15,824
  21,894
  29,501
  38,733
  49,611
  62,082
  76,028
  91,274
  107,602
  123,944
  141,702
  159,812
  178,055
  196,246
  214,237
  231,922
  249,232
  266,137
  282,643
  298,780
  314,604
  330,191
  345,626
  361,009
  376,442
  392,031
  407,883
  424,106
  440,803
Retained Cash Flow (-), $m
  -4,376
  -6,834
  -9,948
  -13,973
  -19,018
  -25,141
  -32,355
  -40,626
  -49,875
  -59,986
  -70,815
  -82,201
  -93,978
  -105,988
  -118,087
  -130,151
  -142,083
  -153,812
  -165,292
  -176,504
  -187,450
  -198,153
  -208,648
  -218,984
  -229,222
  -239,423
  -249,658
  -259,997
  -270,511
  -281,270
  -292,343
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,280
  5,877
  7,921
  10,483
  13,592
  17,256
  21,456
  26,153
  31,288
  36,787
  41,744
  47,725
  53,824
  59,968
  66,094
  72,154
  78,110
  83,940
  89,633
  95,192
  100,627
  105,957
  111,206
  116,405
  121,586
  126,783
  132,034
  137,373
  142,836
  148,460
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  3,937
  4,934
  6,018
  7,141
  8,223
  9,174
  9,915
  10,382
  10,537
  10,372
  9,715
  9,033
  8,154
  7,150
  6,093
  5,047
  4,064
  3,181
  2,420
  1,789
  1,284
  894
  604
  396
  251
  154
  91
  52
  29
  15
Current shareholders' claim on cash, %
  100
  76.5
  60.2
  48.6
  40.2
  33.8
  28.9
  25.2
  22.2
  19.9
  18.0
  16.4
  15.2
  14.1
  13.2
  12.5
  11.9
  11.4
  10.9
  10.6
  10.2
  10.0
  9.7
  9.6
  9.4
  9.3
  9.1
  9.0
  9.0
  8.9
  8.9

Molson Coors Brewing Company manufactures and sells beer and other beverage products in the United States, Canada, Europe, and internationally. It sells various products under the Coors Light, Miller Lite, Coors Banquet, the Blue Moon Brewing Company brands, the Jacob Leinenkugel Brewing Company brands, Keystone, Icehouse, Mickey’s, Miller 64, Miller Genuine Draft, Miller High Life, Milwaukee’s Best, Hamm's, Olde English 800, Steel Reserve, Crispin, Smith & Forge, Redd's, the Henry’s Hard Soda, and Steel Reserve Alloy Series brands. The company also offers various brands, including Molson Canadian, Belgian Moon, Carling, Carling Black Label, Creemore Springs, the Granville Island, Mad Jack, the Miller, Molson Canadian 67, Molson Canadian Cider, Molson Dry, Molson Export, Old Style Pilsner, and the Rickard's family of brands. In addition, it provides its products under the Staropramen, Apatinsko, Astika, Bergenbier, Borsodi, Branik, Jelen, Kamenitza, Niksicko, Noroc, Ostravar, Ozujsko, Sharp's Doom Bar, Worthington's, Cobra, and other brand names. Further, the company imports and sells Hop Valley, Revolver, Saint Archer, Terrapin, Grolsch, Peroni Nastro Azzurro, Pilsner Urquell, Desperados, Dos Equis, Moretti, Sol, Tecate, Carling Strong, Coors, Coors 1873, Coors Extra, Coors Gold, Iceberg 9000, King Cobra, Thunderbolt, and Zima brand products. Additionally, it brews or distributes various brands, such as Amstel Light, Heineken, Murphy's, Newcastle Brown Ale, Strongbow cider, Beck's, Belle-Vue Kriek brands, Hoegaarden, Leffe, Lowenbrau, Löwenweisse, Spaten and Stella Artois, Corona Extra, Rekorderlig, Singha, Blue Moon, Corona, Miller High Life, Molson Canadian, and other Modelo brands, as well as George Killian's Irish Red, the Redd's, and Foster's brands. The company was formerly known as Adolph Coors Company and changed its name to Molson Coors Brewing Company in February 2005. The Company was founded in 1786 and is headquartered in Denver, Colorado.

FINANCIAL RATIOS  of  Molson Coors Brewing Cl B (TAP)

Valuation Ratios
P/E Ratio 9.7
Price to Sales 3.9
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 17
Price to Free Cash Flow 24.4
Growth Rates
Sales Growth Rate 36.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 24.4%
Cap. Spend. - 3 Yr. Gr. Rate 3.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 99.7%
Total Debt to Equity 105.7%
Interest Coverage 20
Management Effectiveness
Return On Assets 10%
Ret/ On Assets - 3 Yr. Avg. 5.9%
Return On Total Capital 11.8%
Ret/ On T. Cap. - 3 Yr. Avg. 6.5%
Return On Equity 21.4%
Return On Equity - 3 Yr. Avg. 10.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 40.2%
Gross Margin - 3 Yr. Avg. 39.8%
EBITDA Margin 73.4%
EBITDA Margin - 3 Yr. Avg. 40.5%
Operating Margin 67.7%
Oper. Margin - 3 Yr. Avg. 33.3%
Pre-Tax Margin 62.1%
Pre-Tax Margin - 3 Yr. Avg. 29.3%
Net Profit Margin 40.5%
Net Profit Margin - 3 Yr. Avg. 21%
Effective Tax Rate 34.6%
Eff/ Tax Rate - 3 Yr. Avg. 19.7%
Payout Ratio 17.9%

TAP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TAP stock intrinsic value calculation we used $4885 million for the last fiscal year's total revenue generated by Molson Coors Brewing Cl B. The default revenue input number comes from 2016 income statement of Molson Coors Brewing Cl B. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TAP stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.7%, whose default value for TAP is calculated based on our internal credit rating of Molson Coors Brewing Cl B, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Molson Coors Brewing Cl B.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TAP stock the variable cost ratio is equal to 85.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TAP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Molson Coors Brewing Cl B.

Corporate tax rate of 27% is the nominal tax rate for Molson Coors Brewing Cl B. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TAP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TAP are equal to 254.6%.

Life of production assets of 45.2 years is the average useful life of capital assets used in Molson Coors Brewing Cl B operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TAP is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $11419 million for Molson Coors Brewing Cl B - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 216.938 million for Molson Coors Brewing Cl B is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Molson Coors Brewing Cl B at the current share price and the inputted number of shares is $19.3 billion.

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COMPANY NEWS

▶ Bud Light's boring new ad gives Miller Lite and DDB Chicago an opening   [02:30PM  American City Business Journals]
▶ Molson Coors misses 2Q profit forecasts   [Aug-03-17 12:25AM  Associated Press]
▶ Molson Coors reports mixed earnings   [01:26PM  CNBC Videos]
▶ Nasdaq Tumbles as Tech Takes a Turn Lower   [Jul-27-17 02:18PM  TheStreet.com]
▶ Blue Moon leaders say year-old brewpub is redefining brewery (Photos)   [Jul-17-17 02:59PM  American City Business Journals]
▶ Top 4 Beer Stocks for 2017   [08:16AM  Investopedia]
▶ The Stocks Behind the Best-Selling Beers of 2017   [Jul-15-17 12:00PM  Motley Fool]
▶ 10 best independent beers for the Fourth of July   [Jul-04-17 10:59AM  MarketWatch]
▶ Betting on beer stocks amid summer sizzle   [Jun-29-17 07:13AM  CNBC Videos]
▶ Is Molson Coors Brewing Stock a Good Investment?   [Jun-27-17 08:06PM  Motley Fool]
▶ Will STZ Deliver Strong Fiscal 1Q18 Sales Growth?   [Jun-26-17 12:06PM  Market Realist]
▶ Beer outperforms in the summer   [Jun-21-17 09:54AM  CNBC Videos]
▶ The 3 Highest Growth Stocks in the Market Today   [Jun-19-17 01:49PM  Motley Fool]
▶ Isinglass, Cochineal, GMOs: Whats in Your Beer?   [Jun-18-17 03:25PM  Insider Monkey]
▶ Leinenkugel Brewing's Wisconsin roots   [Jun-16-17 08:28AM  Fox Business Videos]
▶ Boston Beer: Yes, It Can Get Worse   [Jun-12-17 01:18PM  Barrons.com]
▶ 11 Best Food Company Stocks To Buy Now   [12:19PM  Insider Monkey]
▶ What's on tap for Coors?   [11:34AM  CNBC Videos]
▶ Opening Bell, June 7, 2017   [09:29AM  CNBC Videos]
▶ Today's Bell Ringer, June 7, 2017   [09:20AM  CNBC Videos]
▶ MillerCoors is bringing back Zima   [Jun-02-17 04:11PM  American City Business Journals]
▶ 3 Big-Brand Stocks for May   [May-14-17 11:44AM  Motley Fool]
▶ Wicked Weed beer sale marks flashpoint in brewery turf wars   [May-04-17 05:35PM  Associated Press]
▶ Brewers Earnings on Tap   [05:22PM  Investopedia]
▶ Apple and Perrigo slip while Delphi and Straight Path climb   [May-03-17 06:10PM  Associated Press]
▶ Molson Coors off to a slow start in 2017 with MillerCoors sales decline   [05:15PM  American City Business Journals]
▶ Molson Coors misses 1Q profit forecasts   [08:08AM  Associated Press]
▶ Is Budweiser Really the Cause of Boston Beer's Problems?   [Apr-26-17 09:50AM  Motley Fool]
▶ Molson Coors gives Colorado State students free beer-making equipment   [Apr-25-17 08:10PM  American City Business Journals]
▶ Who Will Prevail in a Marijuana-Friendly Future?   [Apr-21-17 02:54PM  Investopedia]
Financial statements of TAP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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