|
Related Topics
|
Category: Stock Market and Constellation Brands
Date: 3 October 2019 Stock Price: $194.26 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Constellation Brands a leading international producer and marketer of beer, wine and spirits, and the owner of Corona beer. Their holding in Canadian cannabis group, Canopy Growth has lead to significant losses for the group.
|
About Constellation Brands
Constellation Brands (NYSE: STZ and STZ.B), a Fortune 500® company, is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy, and Canada. Constellation is the No. 3 beer company in the U.S. with high-end, iconic imported beer brands such as the Corona and Modelo brand families, and Pacifico. Its high-quality wine and spirits brands include the Robert Mondavi and The Prisoner Wine Company brand families, Kim Crawford, Ruffino, Meiomi, and SVEDKA Vodka. The company’s portfolio also includes a collection of highly-rated wine brands such as SIMI and Mount Veeder Winery, spirits brands High West Whiskey and Casa Noble Tequila, as well as new wine innovations such as Cooper & Thief and Spoken Barrel.
Based in Victor, N.Y., the company believes that industry leadership involves a commitment to brand building, our trade partners, the environment, our investors, and to consumers around the world who choose our products when celebrating big moments or enjoying quiet ones. Since its founding in 1945, Constellation’s ability to see, meet and stay ahead of shifting consumer preferences and trends across total beverage alcohol has fueled our success and made us one of the top growth contributors in beverage alcohol in the U.S.
Based in Victor, N.Y., the company believes that industry leadership involves a commitment to brand building, our trade partners, the environment, our investors, and to consumers around the world who choose our products when celebrating big moments or enjoying quiet ones. Since its founding in 1945, Constellation’s ability to see, meet and stay ahead of shifting consumer preferences and trends across total beverage alcohol has fueled our success and made us one of the top growth contributors in beverage alcohol in the U.S.
Overview of Constellation Brands' latest earnings report
- Net sales: $2.344 billion (up from $2.299 billion for the same quarter of the previous year)
- Net sales increased by 1.95% over the last 12 months
- Cost of sales: $1.158 billion (up from $1.130 billion for the same quarter of the previous year)
- Cost of sales increased by 2.47% over the last 12 months
- Net loss: -$525.2 million (down from $1.14 billion profit for the same quarter of the previous year)
- Diluted loss per share: -$2.77 (down from $5.87 profit per share for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 168.310 million (down from 195.907 million for the same quarter of the previous year)
- Cash and cash equivalents: $81.3 million
- Cash and cash equivalents per share: $0.48
- Cash and cash equivalents makes up 0.24% of Constellation's market capital
- Cash and cash equivalents makes up 0.29% of Constellation's total assets
- We are concerned about the low levels of cash on Constellation's balance sheet and they might start running into cash flow problems if the low cash reserves continue. If this becomes the case the group will either have to issue stock or take on debt to shore up cash reserves, neither of which will be good for stockholders.
- Accounts receivable: $953.7 million
- Accounts receivable makes up 3.46% of Constellation's total assets
- Inventories: $1.311 billion
- Inventories makes up 4.75% of Constellation's total assets
- Goodwill: $7.696 billion
- Goodwill makes up 27.9% of Constellation's total assets. We are always nervous about goodwill making up such a large chunk of a company's assets. Basically goodwill is the estimated value of the name and reputation of the brands they hold. So if they were to sell Corona for example the group will attach a value of goodwill to Corona and tell the buyer this is how much goodwill is in the brand name. Such valuations are usually very subjective and its easy to manipulate or overinflate if you want to overstate the value of your company's assets.
- Goodwill amounts to $45.72 a Constellation Brands stock
- Stockholders equity of Constellation': $11.691 billion
- Stockholders equity per share for Constellation Brands : $69.05
- So Constellation brands is trading at 2.81 times it stockholders equity per share which is well within the expected range of between 2 and 4 times most companies tend to trade at.
Constellation Brands' management commentary on the results and earnings guidance
VICTOR, N.Y., Oct. 03, 2019 (GLOBE NEWSWIRE) -- Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading beverage alcohol company, reported today its second quarter fiscal 2020 results
”The winning streak for our beer business continues with Modelo Especial generating the most growth in the entire U.S. beer category, while Corona remains the #1 high-end beer brand family. This powerful combination gives us confidence in highsingle digit beer growth for years to come. Our Wine & Spirits innovation pipeline is primed to launch impactful product introductions, as we head into the key selling season this fall" saic Bill Newlands, President and Chief Executive of Constellation Brands
"We continue to deliver impressive beer business operating performance and cash flow results. The share repurchases we made during the quarter reflect the confidence we have in our long-term business model, and our ongoing commitment to return cash to shareholders. " said David Klein the CFO of Constellation Brands
”The winning streak for our beer business continues with Modelo Especial generating the most growth in the entire U.S. beer category, while Corona remains the #1 high-end beer brand family. This powerful combination gives us confidence in highsingle digit beer growth for years to come. Our Wine & Spirits innovation pipeline is primed to launch impactful product introductions, as we head into the key selling season this fall" saic Bill Newlands, President and Chief Executive of Constellation Brands
"We continue to deliver impressive beer business operating performance and cash flow results. The share repurchases we made during the quarter reflect the confidence we have in our long-term business model, and our ongoing commitment to return cash to shareholders. " said David Klein the CFO of Constellation Brands
Constellation Brands (NYSE: STZ) stock price history
The image below, obtained from Google, shows the stock price history of Constellation Brands (NYSE: STZ) for the last 5 years. And it's been a very good time for Constellation Brands stockholders. 5 years ago the stock was trading at around $86 a stock and its currently trading at $194.26 a stock. That's a very strong return of 125.8% provided by Constellation Brands over the last 5 years. The stock of Constellation Brands is trading at a lot closer to its 52 week high of $228.91 than it is to its 52 week low of $150.37 which to us is a clear indication that the short term sentiment and momentum of Constellation Brands stock is very positive. But it must be saids markets reacted very negatively to the stock yesterday with it ending down -6.06% (dropping $12.53 for the day)
Recent coverage of Constellation Brands
The extract below shows some of the latest coverage on Constellation Brands obtained from TheStreet.com
Constellation Brands (STZ - Get Report) posted stronger-than-expected second quarter earnings Thursday and lifted its full-year profit guidance while taking an $484 million loss from its holding in Canadian marijuana group Canopy Growth Corp. (CGC - Get Report) . However, the CGC red ink outweighed STZ's good results and sent Constellation shares falling 6.1% to close at $194.26, trimming the stock's year-to-date gains to 20.7%.
Constellation said earnings for the three months ending in August, the group's fiscal second quarter, came in at $2.72 per share, down 5.22% from the same period last year but 10 cents ahead of the Street consensus forecast. Excluding a 20 cents per share loss from its holding in Canopy Growth, the company said, comparable earnings were pegged at $2.92 per share. Group net sales, Constellation said, rose 2% from last year to $2.34 billion, a figure that was largely in-line with analysts' estimates. Looking into its full fiscal year, which ends in March, Constellation said it sees comparable earnings in the range of $9.00 to $9.20 per share, well ahead of the Refinitiv forecast of $8.43 per share, up from its prior forecast of $8.65 and $8.95 per share
Read the full article here
Constellation Brands (STZ - Get Report) posted stronger-than-expected second quarter earnings Thursday and lifted its full-year profit guidance while taking an $484 million loss from its holding in Canadian marijuana group Canopy Growth Corp. (CGC - Get Report) . However, the CGC red ink outweighed STZ's good results and sent Constellation shares falling 6.1% to close at $194.26, trimming the stock's year-to-date gains to 20.7%.
Constellation said earnings for the three months ending in August, the group's fiscal second quarter, came in at $2.72 per share, down 5.22% from the same period last year but 10 cents ahead of the Street consensus forecast. Excluding a 20 cents per share loss from its holding in Canopy Growth, the company said, comparable earnings were pegged at $2.92 per share. Group net sales, Constellation said, rose 2% from last year to $2.34 billion, a figure that was largely in-line with analysts' estimates. Looking into its full fiscal year, which ends in March, Constellation said it sees comparable earnings in the range of $9.00 to $9.20 per share, well ahead of the Refinitiv forecast of $8.43 per share, up from its prior forecast of $8.65 and $8.95 per share
Read the full article here
Constellation Brands (NYSE: STZ) latest stock valuation
So what is Constellation Brands (NYSE: STZ) stock worth based on the release of their latest earnings report and fiscal guidance provide? Based on their earnings report and the guidance provided our valuation models provide a target (full value) price for Constellation Brands of $192 a stock. We therefore believe that the stock is fully valued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $192. So a good entry point into Constellation Brands stock would be at $172.8 or below. We expect the stock of Constellation brands to remain around current levels in the short run. The continued losses of their holding in Canadian cannabis group, Canopy Growth is a drag on their current financial results and affected our latest valuation of the group based on the fact that their net loss more than doubled from -$245 million the previous quarter to over -$500 million for the current quarter.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $192. So a good entry point into Constellation Brands stock would be at $172.8 or below. We expect the stock of Constellation brands to remain around current levels in the short run. The continued losses of their holding in Canadian cannabis group, Canopy Growth is a drag on their current financial results and affected our latest valuation of the group based on the fact that their net loss more than doubled from -$245 million the previous quarter to over -$500 million for the current quarter.