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Constellation Brands (STZ)
NYSE:STZ
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Constellation Brands
(NYSE:STZ)61Neutral
Positive Factors
Negative Factors
Competitive Pressures
Cannabis is seen as a competing factor affecting alcohol consumption.
Market Trends
Health and wellness trends, lower alcohol consumption among Gen Z, cannabis impact, and increased competition are contributing to long-term pressure on the company.
Tariff Risks
President Trump has imposed 25% tariffs on all Mexican imports, which came into effect, increasing uncertainty and causing potential financial hits.
Constellation Brands (STZ) vs. S&P 500 (SPY)
Market Cap
$31.68B
Dividend Yield2.3%
Average Volume (3M)2.96M
Price to Earnings (P/E)46.9
Beta (1Y)0.56
Revenue Growth3.69%
EPS Growth-55.78%
CountryUS
Employees10,600
SectorConsumer Defensive
Sector Strength73
IndustryBeverages - Alcoholic
Share Statistics
EPS (TTM)3.73
Shares Outstanding180,704,560
10 Day Avg. Volume3,601,821
30 Day Avg. Volume2,957,295
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.06
Price to Cash Flow (P/CF)11.60
P/FCF Ratio11.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$238.10Price Target Upside37.98% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering21
Constellation Brands Business Overview & Revenue Model
Company DescriptionConstellation Brands, Inc. is a leading beverage alcohol company operating in the beverage industry. It is known for its wide range of premium wine, spirits, and beer, with a strong focus on imported beer brands. The company’s portfolio includes well-known brands such as Corona, Modelo, and Pacifico in the beer segment, as well as a diverse range of wine and spirits brands. With operations primarily in North America, Constellation Brands is committed to delivering high-quality products that cater to a variety of consumer preferences.
How the Company Makes MoneyConstellation Brands primarily generates revenue through the sale of its alcoholic beverage products across various segments, including beer, wine, and spirits. The beer segment is a significant revenue driver, particularly through the sale of its popular imported Mexican beer brands like Corona and Modelo. The company's wine and spirits segment also contributes to its revenue through a diverse array of premium and super-premium products. Additionally, strategic partnerships and acquisitions have bolstered its product offerings and market presence. Constellation Brands capitalizes on its strong distribution network and marketing strategies to ensure widespread availability and visibility of its products, further enhancing its revenue potential.
Constellation Brands Financial Statement Overview
Summary
Constellation Brands shows solid financial performance with strong revenue growth and improved net income. The company is reducing its debt, enhancing financial health, but faces pressures on operating margins and cash flow.Income Statement
Constellation Brands shows strong gross profit margins and consistent revenue growth, with a notable increase in revenue from $8.34 billion in 2020 to $10.18 billion TTM. The company has improved its profitability over time, with a positive shift in net income from a loss in 2023 to a positive $686 million TTM. However, EBIT and EBITDA margins have decreased in the TTM period compared to the previous year, indicating some pressure on operating efficiency.75
Positive
Balance Sheet
The balance sheet of Constellation Brands reveals a moderate debt-to-equity ratio, indicating a manageable level of leverage. With a debt-to-equity ratio declining from 1.03 in 2022 to 0.11 TTM, the company has been reducing its debt levels. However, the equity ratio has decreased slightly, suggesting a relative increase in liabilities compared to assets. Return on equity has improved with the positive net income in the TTM, providing a sign of enhanced shareholder value.70
Positive
Cash Flow
Constellation Brands' cash flow statement reflects positive operating cash flows, though significantly reduced in the TTM compared to earlier years, highlighting potential challenges in cash generation. The free cash flow has seen a sharp decline TTM, indicating higher capital expenditures or decreased cash conversion. The operating cash flow to net income ratio has decreased, suggesting tighter cash flow management.68
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.18B | 9.96B | 9.45B | 8.82B | 8.61B | 8.34B | Gross Profit |
| 5.20B | 5.02B | 4.77B | 4.71B | 4.47B | 4.15B | EBIT |
| 1.12B | 3.17B | 2.84B | 2.33B | 2.79B | 2.15B | EBITDA |
| 1.61B | 3.08B | 1.26B | 1.09B | 3.31B | -85.00M | Net Income Common Stockholders |
| 686.30M | 1.73B | -38.50M | 1.00M | 2.00B | 21.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 152.40M | 152.40M | 133.50M | 199.40M | 460.60M | 81.40M | Total Assets |
| 25.69B | 25.69B | 24.66B | 25.86B | 27.10B | 27.32B | Total Debt |
| 12.56B | 12.56B | 12.46B | 10.42B | 10.44B | 12.18B | Net Debt |
| 12.41B | 12.41B | 12.33B | 10.22B | 9.98B | 12.10B | Total Liabilities |
| 15.63B | 15.63B | 15.93B | 13.81B | 13.18B | 14.85B | Stockholders Equity |
| 9.74B | 9.74B | 8.41B | 11.73B | 13.60B | 12.13B |
| Cash Flow | Free Cash Flow | ||||
| 1.70B | 1.51B | 1.72B | 1.68B | 1.94B | 1.82B | Operating Cash Flow |
| 2.99B | 2.78B | 2.76B | 2.71B | 2.81B | 2.55B | Investing Cash Flow |
| -1.45B | -1.29B | -999.40M | -1.04B | -87.90M | -531.00M | Financing Cash Flow |
| -1.54B | -1.47B | -1.82B | -1.93B | -2.35B | -2.03B |
Constellation Brands Technical Analysis
Negative
172.56
Price Trends
188.60
Negative
212.76
Negative
229.66
Negative
Market Momentum
-3.11
Negative
42.43
Neutral
45.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STZ, the sentiment is Negative. The current price of 172.56 is above the 20-day moving average (MA) of 171.07, below the 50-day MA of 188.60, and below the 200-day MA of 229.66, indicating a neutral trend. The MACD of -3.11 indicates Negative momentum. The RSI at 42.43 is Neutral, neither overbought nor oversold. The STOCH value of 45.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STZ.
Constellation Brands Risk Analysis
Constellation Brands disclosed 23 risk factors in its most recent earnings report. Constellation Brands reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Constellation Brands Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $122.96B | 20.78 | 7.48% | 1.06% | 0.64% | 9.21% | |
74 Outperform | $12.07B | 11.14 | 8.57% | 2.92% | -0.64% | 22.45% | |
73 Outperform | $48.15B | 44.72 | 4.99% | 1.72% | -1.73% | -57.46% | |
69 Neutral | $2.74B | 50.31 | 6.52% | ― | 0.21% | -20.69% | |
66 Neutral | $61.03B | 16.81 | 32.06% | 3.75% | -1.27% | -12.18% | |
63 Neutral | $20.85B | 13.27 | -10.88% | 7.48% | 1.13% | 11.50% | |
61 Neutral | $31.68B | 46.93 | 8.78% | 2.30% | 3.69% | -55.78% |
* Consumer Defensive Sector Average
Performance Comparison
STZ
Constellation Brands
172.56
-71.07
-29.17%
BUD
Anheuser-Busch Inbev Sa
61.08
1.59
2.67%
SAM
Boston Beer
238.99
-58.06
-19.55%
DEO
Diageo
108.31
-35.79
-24.84%
TAP
Molson Coors
59.58
-1.48
-2.42%
HEINY
Heineken
42.94
-3.14
-6.81%
Constellation Brands Earnings Call Summary
Earnings Call Date: Jan 10, 2025 | % Change Since: -20.84% | Next Earnings Date: Apr 3, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted the resilience and outperformance of the beer segment amidst macroeconomic challenges, with strategic initiatives and capital returns to shareholders. However, it also revealed significant challenges in the Wine and Spirits segment and the need for adjustments in the beer business outlook due to soft consumer demand.Highlights
Beer Business Outperformance
Despite macroeconomic headwinds, the beer business outperformed the total beverage industry in dollar sales growth, continuing its trend of outpacing the total CPG sector.
Strong Performance of Key Beer Brands
Modelo Especial grew depletions by over 3%, Pacifico saw a nearly 20% growth, and the Modelo Chelada brands increased by approximately 4% in depletions.
Capital Returns and Financial Efficiency
Returned nearly $220 million to shareholders through share repurchases and over $180 million in dividends in Q3, maintaining a net leverage ratio of 2.9x.
Wine and Spirits Strategic Divestment
Successfully divested SVEDKA as part of aligning the portfolio with higher-end brands, closing the transaction to focus on growth in craft spirits.
Lowlights
Soft Consumer Demand and Adjusted Beer Business Outlook
Growth in consumer demand was subdued due to macroeconomic headwinds, leading to an adjusted net sales growth outlook for the beer business to be 4% to 7%.
Challenges in Wine and Spirits
Wine and Spirits shipments declined 16% year-over-year, resulting in a 14% decline in net sales and a 25% decline in operating income, mainly due to ongoing consumer demand headwinds and retailer inventory destocking.
Pricing and Competition in Light Beer Segment
Facing competitive pricing pressures, particularly in large pack formats, impacting high-end light beer offerings like Corona Light and Chelada brands.
Company Guidance
During the Constellation Brands Q3 2025 earnings call, key guidance metrics were shared, indicating revised expectations for the fiscal year. The company adjusted its beer business net sales growth to a range of 4% to 7%, with operating income growth projected to be between 9% and 12%, maintaining an operating margin around 39%. Despite headwinds in consumer demand due to macroeconomic conditions, the company anticipates comparable EPS of $13.40 to $13.80, reflecting double-digit growth from the midpoint. The wine and spirits segment is expected to face declines, with net sales down 5% to 8% and operating income down 17% to 19%. Overall enterprise net sales growth is projected at 2% to 5%, with operating income growth of 6% to 9%. The company also reported that it returned nearly $220 million to shareholders through share repurchases and over $180 million in dividends in Q3, bringing total year-to-date cash returns to more than $1.2 billion.Constellation Brands Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Constellation Brands Announces Executive Leadership Change
Neutral
Feb 18, 2025
On February 18, 2025, Constellation Brands announced the departure of E. Yuri Hermida, Executive Vice President, Chief Growth & Strategy Officer, effective February 28, 2025. Mallika Monteiro, Executive Vice President, Managing Director – Beer Brands, will temporarily assume his responsibilities in addition to her current role. The transition reflects Constellation’s commitment to maintaining its strategic growth as it progresses towards long-term aspirations.
DividendsBusiness Operations and StrategyFinancial Disclosures
Constellation Brands Announces Dividend and Financial Results
Neutral
Jan 10, 2025
Constellation Brands announced a quarterly cash dividend for its shareholders and reported its financial results for the third fiscal quarter of 2025. The company achieved a reported EPS of $3.39, with its Beer Business continuing to drive growth despite a challenging market environment. Constellation has lowered its growth expectations for fiscal 2025 net sales and operating income but raised its operating cash flow and free cash flow targets. The company is also advancing its capital expansion plans in Mexico to boost production capacity.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.