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Constellation Brands Inc Class A STZ

Morningstar Rating
$264.02 +4.57 (1.76%)
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Company Report

Constellation Earnings: Profit Rises on Strong Beer Volume but Wine and Spirits Still Struggling

We plan to keep our $280 per share fair value estimate after absorbing wide-moat Constellation Brands’ fiscal 2025 first-quarter results. Revenue rose 6% on the back of an 8% sales increase in the premium beer portfolio (85% of total sales)—more than offsetting continued weakness in wine and spirits. Adjusted EPS rose 17% on expense leverage and lower interest expenses. There's little need to change our fiscal 2025 preresults projections for 6.6% sales growth and $13.70 adjusted EPS, as well as our 10-year forecasts for a 6% sales compound annual growth rate and operating margin averaging in the low 30s. Shares look undervalued, trading at 11% discount to our intrinsic valuation.

Price vs Fair Value

STZ is trading at a 93% premium.
Price
$259.37
Fair Value
$358.00
Uncertainty
Medium
1-Star Price
$312.00
5-Star Price
$725.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Strong brand equity and well-established distributor relationships will continue to fuel beer volume expansion for Constellation.

Bears

Distribution rights surrounding the Modelo and Corona brands limit Constellation’s beer operations to the US market and prevent the firm from replicating its success internationally.

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News

Trading Information

Previous Close Price
$259.45
Day Range
$259.37264.38
52-Week Range
$227.62274.86
Bid/Ask
$263.94 / $264.13
Market Cap
$48.11 Bil
Volume/Avg
413,717 / 1.2 Mil

Key Statistics

Price/Earnings (Normalized)
20.40
Price/Sales
4.72
Dividend Yield (Trailing)
1.42%
Dividend Yield (Forward)
1.56%
Total Yield
2.30%

Company Profile

Constellation Brands is the largest provider of alcoholic beverages across the beer, wine, and spirits categories in the us, generating 80% of revenue from Mexican beer imports under top-selling brands such as Modelo and Corona. The rest of the business includes some remaining wine and spirits brands, categories where the company continue to prune assets in recent years. With its exclusive rights tied to the Mexican beer brands effective only in the us, the firm has small revenue exposure to international markets. Constellation owns a 36% stake in no-moat Canopy Growth, a medicinal and recreational cannabis producer in Canada, and has a 50/50 joint venture with glass manufacturer Owens-Illinois in Mexico.
Sector
Consumer Defensive
Industry
Beverages - Wineries & Distilleries
Stock Style Box
Mid Core
Total Number of Employees
10,600

Competitors

Valuation

Metric
STZ
BF.B
SAM
Price/Earnings (Normalized)
20.4020.2930.69
Price/Book Value
4.615.843.30
Price/Sales
4.724.961.74
Price/Cash Flow
15.0822.7815.49
Price/Earnings
STZ
BF.B
SAM

Financial Strength

Metric
STZ
BF.B
SAM
Quick Ratio
0.310.781.32
Current Ratio
1.232.592.14
Interest Coverage
7.9311.11
Quick Ratio
STZ
BF.B
SAM

Profitability

Metric
STZ
BF.B
SAM
Return on Assets (Normalized)
9.24%10.39%8.78%
Return on Equity (Normalized)
24.65%24.93%11.79%
Return on Invested Capital (Normalized)
12.36%14.31%10.50%
Return on Assets
STZ
BF.B
SAM
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