Molson Coors Beverage CompanyTAPNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $149.82 per share(market-calibrated)

+216.5%

Upside to Fair Value

Current

$47.33

Pure Model

$166.76

Fair Value

$149.82

Bull Case

$191.83

Bear Case

$148.06

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $166.76.

What's Driving This Ratingfor TAP

↓

CapEx normalizing toward maintenance

Historical CapEx is 5.83% of revenue (heavy investment phase). Model fades this to 3.00% by Year 10, freeing up ~$370M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 4.69% — below the sector mature average of 16.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.6B (12.29% margin).

→

Moderate revenue growth

Analyst consensus projects -0.06% revenue growth, fading to 2.50% by Year 10. Revenue reaches $13.1B (vs $11.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 69.01% indicates efficient cash generation. FCF reaches $1.7B by Year 10 (12.98% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.45

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.52%

Cost of Debt

Pre-tax Cost of Debt3.91%

Tax Rate21.00%

After-tax Cost of Debt3.09%

Equity Weight (E/V)59.45%

Debt Weight (D/V)40.55%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (59.45% × 6.52%) + (40.55% × 3.09%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$11.1B	$11.2B	$11.6B	$12.1B	$13.1B
EBIT	$523M	$526M	$543M	$1.1B	$1.6B
Tax	$110M	$111M	$114M	$223M	$338M
NOPAT	$413M	$416M	$429M	$841M	$1.3B
+ Depreciation	$724M	$730M	$752M	$790M	$851M
- Capex	$649M	$583M	$528M	$479M	$392M
- Δ NWC	-$677,373.8	$7M	$28M	$29M	$32M
Free Cash Flow	$489M	$556M	$624M	$1.1B	$1.7B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$464M	$473M	$478M	$772M	$993M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.7B

Terminal Growth Rate2.50%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$58.0B

PV of Terminal Value$33.9B

Exit Multiple Method

Year 10 EBITDA$2.5B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$49.2B

PV of Terminal Value$28.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.6B

PV of Terminal Value$33.9B

Enterprise Value$40.5B

(-) Net Debt$5.4B

Equity Value$35.1B

Shares Outstanding195M

Price per Share$179.96

Exit Multiple Method

PV of Projected FCFs$6.6B

PV of Terminal Value$28.8B

Enterprise Value$35.4B

(-) Net Debt$5.4B

Equity Value$30.0B

Shares Outstanding195M

Price per Share$153.55

Pure Model Fair Value

$166.76

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.50%	$256.18	$244.18	$232.75	$221.87	$211.51
4.50%	$183.99	$203.50	$232.75	$221.87	$211.51
5.50%	$144.38	$153.97	$166.76	$184.66	$211.51
6.50%	$118.22	$123.70	$130.56	$139.37	$151.11
7.50%	$99.11	$102.54	$106.67	$111.70	$118.00

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$148.06

212.8% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.56

Base Case

$166.76

252.3% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.45

Bull Case

$191.83

305.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.38

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.06%

Year 3 Revenue Growth0.59%

Year 5 Revenue Growth2.48%

Year 7 Revenue Growth2.49%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin4.69%

Terminal EBIT Margin16.00%

Tax Rate21.00%

Historical Capex / Rev5.83%

Terminal Capex / Rev3.00%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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