Your Briefing on Constellation Brands Stock

Today we're going to take a closer look at large-cap Consumer Staples company Constellation Brands, whose shares are currently trading at $246.63. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

Constellation Brands's P/B and P/E Ratios Are Higher Than Average:

Constellation Brands, Inc., together with its subsidiaries, produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, Constellation Brands has a trailing 12 month P/E ratio of -2466.3 and a P/B ratio of 5.37.

Constellation Brands's PEG ratio is 2.1, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Exceptional Profitability Overshadowed by Excessive Leverage:

2020-02-29 2021-02-28 2022-02-28 2023-02-28
Revenue (MM) $8,344 $8,615 $8,821 $9,453
Gross Margins 49.8% 51.8% 53.4% 50.4%
Operating Margins 30.3% 32.5% 34.0% 30.1%
Net Margins -0.14% 23.19% -0.46% -0.75%
Net Income (MM) -$12 $1,998 -$40 -$71
Net Interest Expense (MM) -429 -386 -356 -399
Net Interest Expense (MM) -$429 -$386 -$356 -$399
Depreciation & Amort. (MM) -$326 -$294 -$337 -$384
Earnings Per Share -$0.07 $10.23 -$0.22 -$0.1
EPS Growth n/a 14714.29% -102.15% 54.55%
Diluted Shares (MM) 192 219 191 2
Free Cash Flow (MM) $1,825 $1,942 $1,679 $1,722
Capital Expenditures (MM) -$726 -$865 -$1,027 -$1,035
Net Current Assets (MM) -$11,365 -$10,131 -$10,478 -$12,432
Current Ratio 1.51 2.4 1.23 1.18
Long Term Debt (MM) $11,211 $10,413 $9,488 $11,286
Net Debt / EBITDA -54.23 3.13 10.61 10.87

Constellation Brands has growing revenues and increasing reinvestment in the business, strong margins with a stable trend, and a steady stream of strong cash flows. However, Constellation Brands has slimmer gross margins than its peers, declining EPS growth, and a highly leveraged balance sheet. Finally, we note that Constellation Brands has just enough current assets to cover current liabilities.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.