NYSE:STZ

Stock Analysis Report

Executive Summary

Constellation Brands, Inc., together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy.

Rewards

Trading at 24.3% below its fair value

Earnings are forecast to grow 123.91% per year

Risk Analysis

Debt is not well covered by operating cash flow

Unstable dividend track record

Large one-off items impacting financial results

Profit margins (10.1%) are lower than last year (38.4%)



Snowflake Analysis

Fair value with moderate growth potential.


Similar Companies

Share Price & News

How has Constellation Brands's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: STZ has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.7%

STZ

1.3%

US Beverage

1.8%

US Market


1 Year Return

16.5%

STZ

24.6%

US Beverage

20.1%

US Market

Return vs Industry: STZ underperformed the US Beverage industry which returned 24.6% over the past year.

Return vs Market: STZ underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

STZIndustryMarket
7 Day1.7%1.3%1.8%
30 Day7.3%4.8%1.4%
90 Day16.5%10.8%8.8%
1 Year18.3%16.5%27.8%24.6%22.7%20.1%
3 Year31.5%26.4%48.6%37.1%50.1%40.4%
5 Year87.0%76.1%64.7%44.1%72.9%53.9%

Price Volatility Vs. Market

How volatile is Constellation Brands's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Constellation Brands undervalued compared to its fair value and its price relative to the market?

24.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: STZ ($203.83) is trading below our estimate of fair value ($269.3)

Significantly Below Fair Value: STZ is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: STZ is poor value based on its PE Ratio (47x) compared to the Beverage industry average (34.1x).

PE vs Market: STZ is poor value based on its PE Ratio (47x) compared to the US market (18.3x).


Price to Earnings Growth Ratio

PEG Ratio: STZ is good value based on its PEG Ratio (0.4x)


Price to Book Ratio

PB vs Industry: STZ is overvalued based on its PB Ratio (3.3x) compared to the US Beverage industry average (3x).


Next Steps

Future Growth

How is Constellation Brands forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

123.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: STZ's forecast earnings growth (123.9% per year) is above the savings rate (1.7%).

Earnings vs Market: STZ's earnings (123.9% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: STZ's revenue (0.3% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: STZ's revenue (0.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: STZ's Return on Equity is forecast to be low in 3 years time (16.2%).


Next Steps

Past Performance

How has Constellation Brands performed over the past 5 years?

20.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: STZ has a large one-off loss of $625.0M impacting its November 30 2019 financial results.

Growing Profit Margin: STZ's current net profit margins (10.1%) are lower than last year (38.4%).


Past Earnings Growth Analysis

Earnings Trend: STZ's earnings have grown significantly by 20.1% per year over the past 5 years.

Accelerating Growth: STZ's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: STZ had negative earnings growth (-73.3%) over the past year, making it difficult to compare to the Beverage industry average (6.8%).


Return on Equity

High ROE: STZ's Return on Equity (7.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Constellation Brands's financial position?


Financial Position Analysis

Short Term Liabilities: STZ's short term assets ($3.5B) exceed its short term liabilities ($2.5B).

Long Term Liabilities: STZ's short term assets ($3.5B) do not cover its long term liabilities ($12.6B).


Debt to Equity History and Analysis

Debt Level: STZ's debt to equity ratio (102.4%) is considered high.

Reducing Debt: STZ's debt to equity ratio has reduced from 130% to 102.4% over the past 5 years.

Debt Coverage: STZ's debt is not well covered by operating cash flow (19%).

Interest Coverage: STZ's interest payments on its debt are well covered by EBIT (6x coverage).


Balance Sheet

Inventory Level: STZ has a high level of physical assets or inventory.

Debt Coverage by Assets: STZ's debt is not covered by short term assets (assets are 0.3x debt).


Next Steps

Dividend

What is Constellation Brands's current dividend yield, its reliability and sustainability?

1.47%

Current Dividend Yield


Dividend Yield vs Market

company1.5%marketbottom25%1.4%markettop25%3.7%industryaverage2.5%forecastin3Years1.5%

Current dividend yield vs market & industry

Notable Dividend: STZ's dividend (1.47%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: STZ's dividend (1.47%) is low compared to the top 25% of dividend payers in the US market (3.68%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, STZ has been paying a dividend for less than 10 years.

Growing Dividend: STZ's dividend payments have increased, but the company has only paid a dividend for 5 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (69%), STZ's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: STZ's dividends in 3 years are forecast to be well covered by earnings (38.7% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.7yrs

Average management tenure


CEO

Bill Newlands (60yo)

0.9yrs

Tenure

US$7,854,942

Compensation

Mr. William A. Newlands, also known as Bill, has been the President of Constellation Brands, Inc. since February 12, 2018 and has been its Chief Executive Officer and Director since March 1, 2019. Mr. Newl ...


CEO Compensation Analysis

Compensation vs Market: Bill's total compensation ($USD7.85M) is about average for companies of similar size in the US market ($USD10.82M).

Compensation vs Earnings: Bill's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Robert Sands
Executive Chairman0.9yrsUS$10.31m5.72% $2.2b
William Newlands
President0.9yrsUS$7.85m0.0080% $3.1m
Richard Sands
Executive Vice Chairman of the Board0.9yrsUS$7.98m3.7% $1.4b
Francis Hetterich
Executive VP & President of Beer Division16.7yrsUS$5.48m0.034% $13.0m
Robert Hanson
Executive VP and President of Wine & Spirits0.7yrsUS$396.83k0.0014% $534.6k
Christopher Stenzel
President of Wine & Spirits Division3.1yrsUS$6.02m0.016% $6.2m
Garth Hankinson
Executive VP & CFO0.08yrsno data0.0019% $736.0k
Ricardo Bartra
Senior VP & Chief Technology Officer1.7yrsno datano data
Patty Yahn-Urlaub
Vice President of Investor Relations12.8yrsno datano data
James Bourdeau
Executive VP5.4yrsno data0.0015% $584.9k

1.7yrs

Average Tenure

56yo

Average Age

Experienced Management: STZ's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Robert Sands
Executive Chairman0.9yrsUS$10.31m5.72% $2.2b
William Newlands
President0.9yrsUS$7.85m0.0080% $3.1m
Richard Sands
Executive Vice Chairman of the Board0.9yrsUS$7.98m3.7% $1.4b
Jeremy S. Fowden
Non-Executive Director9.8yrsUS$257.43k0.0091% $3.5m
James Locke
Lead Director0yrsUS$257.43k0.021% $8.0m
Daniel McCarthy
Independent Director4.6yrsUS$242.43k0.0011% $437.7k
Jennifer Daniels
Independent Director1.4yrsUS$167.62k0.00019% $73.6k
Judy Schmeling
Independent Director7yrsUS$426.89k0.0020% $763.1k
Ernesto M. Hernández
Independent Director5.6yrsUS$242.43k0.00096% $371.9k
Susan Johnson
Independent Director2.6yrsUS$242.43k0.00048% $185.9k

2.6yrs

Average Tenure

60yo

Average Age

Experienced Board: STZ's board of directors are not considered experienced ( 2.6 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: STZ insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Constellation Brands, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Constellation Brands, Inc.
  • Ticker: STZ
  • Exchange: NYSE
  • Founded: 1945
  • Industry: Distillers and Vintners
  • Sector: Food, Beverage & Tobacco
  • Market Cap: US$38.736b
  • Shares outstanding: 190.82m
  • Website: https://www.cbrands.com

Number of Employees


Location

  • Constellation Brands, Inc.
  • Building 100
  • 207 High Point Drive
  • Victor
  • New York
  • 14564
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
STZ.BNYSE (New York Stock Exchange)Class B Common StockUSUSDFeb 1973
STZNYSE (New York Stock Exchange)YesClass A Common StockUSUSDJul 1986
CB1ADB (Deutsche Boerse AG)YesClass A Common StockDEEURJul 1986
STZ *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNJul 1986
STZSWX (SIX Swiss Exchange)YesClass A Common StockCHCHFJul 1986
CB1AETLX (Eurotlx)YesClass A Common StockITEURJul 1986
STZB34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REP 0.25 COM USD0.01 CLASS ABRBRLMay 2019

Biography

Constellation Brands, Inc., together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. It provides beer primarily under the Corona Extra, Corona Light, Corona Premier, Corona Familiar Modelo Especial, Modelo Negra, Modelo Chelada, Pacifico, and Victoria brands, as well as Funky Buddha, Four Corners, and Ballast Point brands. The company offers wine under the 7 Moons, Black Box, Clos du Bois, Franciscan Estate, Kim Crawford, Mark West, Meiomi, Mount Veeder, Nobilo, Ravage, Robert Mondavi, Ruffino, Schrader, Simi, The Dreaming Tree, Charles Smith, Prisoner; and sprits under the Casa Noble, High West, SVEDKA Vodka, Casa Noble Tequila, and High West Whiskey brands. It provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. The company was founded in 1945 and is headquartered in Victor, New York. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 00:31
End of Day Share Price2020/02/14 00:00
Earnings2019/11/30
Annual Earnings2019/02/28


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.