In this article, I will take a look at Constellation Brands, Inc.’s (NYSE:STZ) most recent earnings update (28 February 2019) and compare these latest figures against its performance over the past few years, along with how the rest of STZ’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Commentary On STZ’s Past Performance
STZ’s trailing twelve-month earnings (from 28 February 2019) of US$3.4b has jumped 48% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 24%, indicating the rate at which STZ is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is only due to industry tailwinds, or if Constellation Brands has experienced some company-specific growth.
In terms of returns from investment, Constellation Brands has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the US Beverage industry of 7.4%, indicating Constellation Brands has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Constellation Brands’s debt level, has declined over the past 3 years from 12% to 10%.
What does this mean?
Though Constellation Brands’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Constellation Brands to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STZ’s future growth? Take a look at our free research report of analyst consensus for STZ’s outlook.
- Financial Health: Are STZ’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 February 2019. This may not be consistent with full year annual report figures.
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