The Zacks Analyst Blog Highlights: Molson Coors Brewing, Anheuser-Busch InBev, PPL, FirstEnergy and Exelon

CHICAGO, Nov. 4, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Molson Coors Brewing Co. (NYSE: TAP), Anheuser-Busch InBev (NYSE: BUD), PPL Corporation (NYSE: PPL), FirstEnergy Corp. (NYSE: FE) and Exelon Corp. (NYSE: EXC).

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Here are highlights from Thursday's Analyst Blog:

Molson Coors Misses

Molson Coors Brewing Co. (NYSE: TAP) reported adjusted earnings of $1.14 per share in the third-quarter 2011, lagging the Zacks Consensus Estimate of $1.25. The earnings also missed the prior-year quarter earnings of $1.28.

Including special one-time items, Molson Coors reported earnings of $1.05 per share, down 23.9% from $1.38.

Molson Coors' earnings were negatively impacted by continuing weak economic conditions, high unemployment among core beer consumers and commodity inflation in the quarter. Despite these challenges, Molson Coors continued to focus on its growth strategies of maximizing profitable growth opportunities in the core markets, expanding into new and emerging markets, and looking for M&A opportunities to generate shareholder value.

Revenues and Operating Profits

Net sales climbed 9.1% to $954.4 million in the quarter from $875.0 million in the year-ago period. It also surpassed the Zacks Consensus Revenue Estimate of $946 million.

Molson Coors generated a gross profit of $403.9 million, 3.3% higher than the profit generated in third-quarter 2010. Gross margin was 42.3% in the reported quarter, down 540 basis points from the prior-year quarter.

Total worldwide beer volume decreased 0.8% in the quarter to 13.13 million hectoliters in the third-quarter of 2011.

During the quarter, Molson Coors incurred special charges and other non-core items of $5.6 million pretax, which was driven by one-time employee-related expenses in the U.K. and a $3.0 million unrealized mark-to-market loss on aluminum hedges in cost of goods sold.

Recommendation

We remain encouraged by the restructuring initiatives taken by the company to reduce overhead costs and boost profitability. The initiatives include closure of underperforming breweries and efforts to improve efficiencies in finance, administration and human resource activities.

Further, the announcement of a new share repurchase program will strengthen the company's balance sheet. Moreover, it signifies that Molson Coors has substantial cash generation capability.

However, the seasonal nature of business and increased competition from Anheuser-Busch InBev (NYSE: BUD) are concerns for Molson Coors.

Currently, Molson Coors has a Zacks #3 Rank, implying a short-term Hold recommendation. On a long-term basis, the company maintains a Neutral recommendation on the stock.

PPL Beats, Revises Outlook

PPL Corporation (NYSE: PPL), a Pennsylvania-based diversified utility company engaged in generating and marketing electricity in the Northeastern and Western U.S., reported third quarter adjusted earnings of 76 cents per share, smoothly sailing past the Zacks Consensus Estimate of 69 cents. Operating results in the quarter also inched up 3% from the year-ago earnings of 74 cents.

On a GAAP basis, the company reported an EPS of 76 cents, which included one-time items that had no impact. This compared to third quarter 2010 GAAP EPS of 51 cents, which included net special items charges of 23 cents per share.

Revenue

Net revenue of $3.120 billion in the quarter was above the Zacks Consensus Estimate of $2.896 billion and the year-ago period revenue of $2.179 billion.

Outlook

Looking ahead, PPL Corp. remains highly confident of achieving the projected results from its acquired U.K. business, given the significant progress made on the integration since closing the acquisition. Encouraged by the solid performance of its U.K. operations, including the newly acquired Midlands utilities, the company has raised its earnings guidance for full-year 2011.

PPL Corp. raised the lower end of its 2011 adjusted earnings guidance range to $2.55 to $2.75 per share from the previous range of $2.50 to $2.75. The company also revised its GAAP earnings guidance to the $2.44 to $2.64 range.

Our Take

We maintain our Neutral recommendation on PPL, supported by a short term Zacks #3 Rank (Hold). PPL Corp. primarily competes with FirstEnergy Corp. (NYSE: FE) and Exelon Corp. (NYSE: EXC).

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