Constellation Brands (STZ) AI Stock Analysis

• Market Cap: $33.55B
• Dividend Yield: 2.16%
• Average Volume (3M): 2.76M
• Price to Earnings (P/E): 49.1
• Beta (1Y): 0.49
• Revenue Growth: 3.69%
• EPS Growth: -55.78%
• Country: US
• Employees: 10,600
• Sector: Consumer Defensive
• Sector Strength: 96
• Industry: Beverages - Wineries & Distilleries
• EPS (TTM): 2.63
• Shares Outstanding: 180,704,560
• 10 Day Avg. Volume: 3,296,077
• 30 Day Avg. Volume: 2,763,415
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.15
• Price to Cash Flow (P/CF): 11.70
• P/FCF Ratio: 11.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $206.72
• Price Target Upside: 10.55% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 18

Constellation Brands exhibits a solid financial foundation with strong revenue growth and improved profitability, but faces challenges with margin pressures and cash flow management. While the beer segment shows resilience, the wine and spirits segment struggles. Technical indicators suggest mixed momentum, and the high P/E ratio points to potential overvaluation. Strategic initiatives like capital returns provide support, but overall, caution is advised due to valuation concerns and segment-specific challenges.

Positive Factors

Brand and Market Positioning

Brand health remains best-in-class, and W&S is now a smaller part of the business/better positioned for growth.

Earnings

STZ closed out its fiscal year beating expectations on both the top and bottom lines and delivered FY25 EPS at the high-end of their updated guidance range.

Strategic Initiatives

Wine brand divestitures, lower capex, and higher buybacks will partially offset the reset.

Negative Factors

Future Guidance

STZ provided below consensus FY26 EPS guidance including wine divestiture dilution and FY27/FY28 guidance below prior medium-term outlook.

Market Conditions

Leverage to Hispanics (~50% of consumers) is a headwind (following decades of being a tailwind).

Sales Growth

Management lowered its multi-year (FY26-28) sales outlook notably below historical growth, citing the tough macro environment.

Constellation Brands Business Overview & Revenue Model

Company Description

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. It provides beer primarily under the Corona Extra, Corona Premier, Corona Familiar, Corona Light, Corona Refresca, Corona Hard Seltzer, Modelo Especial, Modelo Negra, Modelo Chelada, Pacifico, and Victoria brands. The company offers wine under the 7 Moons, Cook's California Champagne, Cooper & Thief, Crafters Union, Kim Crawford, Meiomi, Mount Veeder, Ruffino, SIMI, The Dreaming Tree, Charles Smith, The Prisoner Wine Company, Robert Mondavi, My Favorite Neighbor, and Schrader; and spirits under the Casa Noble, Copper & Kings, High West, Mi CAMPO, Nelson's Green Brier, and SVEDKA brands. It provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.

How the Company Makes Money

Constellation 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 has shown strong revenue growth and a positive net income shift, indicating improved profitability. However, challenges are present with decreased EBIT and EBITDA margins, and cash flow management issues due to reduced operating cash flows and free cash flow. The reduction in debt enhances financial health, yet margin pressures warrant monitoring.

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.

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.

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.

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
43.50M	152.40M	133.50M	199.40M	460.60M	81.40M
	Total Assets
8.09B	25.69B	24.66B	25.86B	27.10B	27.32B
	Total Debt
3.84B	12.56B	12.46B	10.42B	10.44B	12.18B
	Net Debt
3.79B	12.41B	12.33B	10.22B	9.98B	12.10B
	Total Liabilities
5.52B	15.63B	15.93B	13.81B	13.18B	14.85B
	Stockholders Equity
2.58B	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

• Technical Analysis Sentiment: Positive
• Last Price: 187.00
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STZ, the sentiment is Positive. The current price of 187 is above the 20-day moving average (MA) of 182.13, above the 50-day MA of 178.19, and below the 200-day MA of 218.38, indicating a neutral trend. The MACD of 1.48 indicates Negative momentum. The RSI at 57.90 is Neutral, neither overbought nor oversold. The STOCH value of 80.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STZ.

Constellation Brands Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ABEV	83 Outperform	$37.98B	14.10	16.55%	5.20%	3.69%	-8.13%
CCU	79 Outperform	$2.78B	16.47	11.55%	1.66%	0.15%	35.56%
SAM	73 Outperform	$2.75B	49.80	5.99%	―	0.21%	-20.69%
DEO	72 Outperform	$59.80B	16.92	35.83%	3.74%	-1.21%	-8.89%
STZ	68 Neutral	$33.55B	49.10	-0.98%	2.16%	3.69%	-55.78%
TAP	68 Neutral	$11.90B	10.99	8.54%	3.05%	-0.64%	22.45%
Sector *	63 Neutral	$9.29B	14.78	4.06%	187.31%	3.96%	6.50%

Constellation Brands Corporate Events

Constellation Brands Announces Executive Leadership Change

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.

Constellation Brands Announces Dividend and Financial Results

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.