Constellation Brands -- The Essentials

Constellation Brands logged a 2.2% change during today's afternoon session, and is now trading at a price of $247.61 per share.

Constellation Brands returned gains of 13.1% last year, with its stock price reaching a high of $273.65 and a low of $208.45. Over the same period, the stock underperformed the S&P 500 index by -7.3%. As of April 2023, the company's 50-day average price was $238.25. 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. Based in Victor, NY, the large-cap Consumer Staples company has 10,700 full time employees. Constellation Brands has offered a 1.4% dividend yield over the last 12 months.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2018 2019 2020 2021 2022 2023
Revenue (MM) $8,327 $8,116 $8,344 $8,615 $8,821 $10,177
Revenue Growth n/a -2.53% 2.8% 3.25% 2.39% 15.38%
Operating Margins 27% 30% 26% 32% 26% 28%
Net Margins 28% 42% 0% 23% 0% 0%
Net Income (MM) $2,303 $3,436 -$12 $1,998 -$40 -$38
Net Interest Expense (MM) -$332 -$367 -$429 -$386 -$356 -$399
Depreciation & Amort. (MM) $294 $333 $326 $294 $337 $384
Earnings Per Share $171457.0 $167249.0 $168329.0 $170239.0 $167431.0 $169337.0
Diluted Shares (MM) 171,457 167,249 168,329 170,239 167,431 169,337
Free Cash Flow (MM) $3,354 $7,078 $1,825 $1,942 $1,679 $2,757
Current Ratio 1.08 1.41 1.69 1.5 1.29 1.2
Total Debt (MM) $22,256 $23,834 $22,155 $20,503 $20,785 $22,526
Net Debt / EBITDA 8.6 8.65 8.87 6.53 7.72 6.96

Constellation Brands's Valuation Is in Line With Its Sector Averages:

Constellation Brands has a trailing twelve month P/E ratio of 28.0, compared to an average of 21.21 for the Consumer Staples sector. Based on its EPS guidance of $13.41, the company has a forward P/E ratio of 17.8. The -74.1% compound average growth rate of Constellation Brands's historical and projected earnings per share yields a PEG ratio of -0.38. This indicates that its shares are overvalued.Furthermore, Constellation Brands is likely overvalued compared to the book value of its equity, since its P/B ratio of 4.84 is higher than the sector average of 4.12. The company's shares are currently trading -98.2% below their Graham number.

There's an Analyst Consensus of Some Upside Potential for Constellation Brands:

The 21 analysts following Constellation Brands have set target prices ranging from $252.0 to $311.0 per share, for an average of $292.76 with a buy rating. As of April 2023, the company is trading -18.6% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Constellation Brands has a very low short interest because 0.9% of the company's shares are sold short. Institutions own 80.4% of the company's shares, and the insider ownership rate stands at 12.41%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 7% stake in the company is worth $3,360,522,072.

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.