Constellation Brands (NYSE: STZ) earnings release for the 2nd quarter of their 2021 fiscal year
Category: Stock Market and Constellation Brands (STZ)
Date: 4 October 2020 Stock Price of Constellation Brands (STZ): $185.60 We take a look at the 2nd quarter earnings report of their 2021 fiscal year of Constellation Brands a leading international producer and marketer of beer, wine and spirits, and the owner of Corona beer and a equity investor in Canadian cannabis company, Canopy. Net sales for the quarter came in at $2.26 billion and net earnings for the quarter amounted to $512.1 million.
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Despite the ongoing challenges of the pandemic, we deliver excellent Q2 results, as we continued to invest in brands and capabilities to drive sustainable long-term growth. We remain confident in the resiliency of our business, our brand health and consumer takeaway remain strong, and we are well positioned to deliver a solid year of organic growth in fiscal 21. -Bill Newlands, president and CEO of Constellation Brands "
About Constellation Brands (STZ)
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.
In the beer business, we have solidified our position in the U.S. beer market; enhanced our margins, results of operations and operating cash flow; and provided new avenues for growth. We have made capital investments and acquisitions to increase beer production capacity to secure independence from a supply standpoint and to support the growth of the business. Additionally, in an effort to more fully compete in growing sectors of the highend segment of the U.S. beer market, we’ve made several acquisitions of high-quality, regional craft beer brands and leveraged our innovation capabilities to introduce new brands that align with consumer trends.
In our wine and spirits business, as part of our efforts to focus on higher-end brands, improve margins and create operating efficiencies, we have acquired higher-margin, higher-growth wine brands and portfolios of brands, including Meiomi, Prisoner and Charles Smith, and have strategically optimized the value of this business, particularly lower-margin, lower-growth products, with the divestiture of the Canadian wine business and the expected transaction, which was recently announced, to divest a portion of our wine and spirits business. In addition, we have added higher-end brands to our spirits portfolio through the acquisitions of Casa Noble tequila and High West craft whiskeys.
The summary below shows the sales mix of Constellation Brands. It shows the sales values in Dollar millions as well as the relative contribution to total sales for Constellation Brands:
In the U.S., we are the leading imported beer company and have eight of the 15 top-selling imported beer brands. Corona Extra is the best-selling imported beer and the sixth best-selling beer overall in the U.S. and Modelo Especial is the second-largest and the fastest-growing major imported beer brand.
Beer brands of Constellation Brands:
Wine Brands
Wine Portfolio of Brands
Spirits Brands
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.
In the beer business, we have solidified our position in the U.S. beer market; enhanced our margins, results of operations and operating cash flow; and provided new avenues for growth. We have made capital investments and acquisitions to increase beer production capacity to secure independence from a supply standpoint and to support the growth of the business. Additionally, in an effort to more fully compete in growing sectors of the highend segment of the U.S. beer market, we’ve made several acquisitions of high-quality, regional craft beer brands and leveraged our innovation capabilities to introduce new brands that align with consumer trends.
In our wine and spirits business, as part of our efforts to focus on higher-end brands, improve margins and create operating efficiencies, we have acquired higher-margin, higher-growth wine brands and portfolios of brands, including Meiomi, Prisoner and Charles Smith, and have strategically optimized the value of this business, particularly lower-margin, lower-growth products, with the divestiture of the Canadian wine business and the expected transaction, which was recently announced, to divest a portion of our wine and spirits business. In addition, we have added higher-end brands to our spirits portfolio through the acquisitions of Casa Noble tequila and High West craft whiskeys.
The summary below shows the sales mix of Constellation Brands. It shows the sales values in Dollar millions as well as the relative contribution to total sales for Constellation Brands:
- Beer: 5,202.1 (64.1%)
- Wine: 2,532.5 (31.2%)
- Spirits: 381.4 (4.7%)
In the U.S., we are the leading imported beer company and have eight of the 15 top-selling imported beer brands. Corona Extra is the best-selling imported beer and the sixth best-selling beer overall in the U.S. and Modelo Especial is the second-largest and the fastest-growing major imported beer brand.
Beer brands of Constellation Brands:
- Corona Brand Family
- Corona Extra
- Corona Premier
- Corona Familiar
- Corona Light
- Modelo Brand Family
- Modelo Especial
- Modelo Negra
- Modelo Chelada
- Other Import Brands
- Pacifico
- Victoria
Wine Brands
- 7 Moons
- Black Box
- Mark West
- Robert Mondavi
- Meiomi Ruffino
- Clos du Bois
- Mount Veeder
- Schrader
- Franciscan Estate
- Nobilo
- Simi
- Kim Crawford
- Ravage
- The Dreaming Tree
Wine Portfolio of Brands
- Charles Smith
- Prisoner
Spirits Brands
- Casa Noble
- High West
- SVEDKA Vodka
Overview of Constellation Brands' 2nd quarter 2021 earnings report
- Net sales: $2.260 billion (down from $2.344 billion for the same quarter of the previous year)
- Net sales decreased by -3.6% over the last 12 months
- Cost of sales: $1.044 billion (down from $1.158 billion for the same quarter of the previous year)
- Cost of sales decreased by- 9.8% over the last 12 months
- Some margin gain for Constellation Brands as their net sales decreased at a slower rate than their cost of sales
- Net earnings of Constellation Brands: $512.1 million (up from -$525.2 million for the same quarter of the previous year)
- Diluted earnings per share: $2.62 (up from -$2.77 per share for the same quarter of the previous year)
- PE ratio of Constellation Brands: 17.7
- Dividend declared for the quarter: $0.68
- Dividend yield of Constellation Brands: 1.45%
- Diluted weighted-average shares outstanding: 170.078 million (up from 168.310 million for the same quarter of the previous year)
- Cash and cash equivalents: $204.6 million
- Cash and cash equivalents per share: $1.20
- Cash and cash equivalents makes up 0.64% of Constellation's market capital
- Cash and cash equivalents makes up 0.77% 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: $926.3 million
- Accounts receivable makes up 3.5 % of Constellation's total assets
- Inventories: $1.328 billion
- Inventories makes up 5% of Constellation's total assets
- Goodwill: $7.717 billion
- Goodwill makes up 29.1% 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 $45.30 a Constellation Brands stock
- Stockholders equity of Constellation': $12 billion
- Stockholders equity per share for Constellation Brands : $70.55
- So Constellation brands is trading at 2.63 times it stockholders equity per share which is within the expected range of between 2 and 4 times most companies tend to trade at.
- To put this into perspective the S&P 500 trades at an average price to book value of 3.7.
Constellation Brands' management commentary on their 1st quarter 2021 results
VICTOR, N.Y., Oct. 01, 2020 (GLOBE NEWSWIRE) -- Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading beverage alcohol company, reported today its second quarter fiscal 2021 results
“Despite the ongoing challenges of the pandemic, we deliver excellent Q2 results, as we continued to invest in brands and capabilities to drive sustainable long-term growth. We remain confident in the resiliency of our business, our brand health and consumer takeaway remain strong, and we are well positioned to deliver a solid year of organic growth in fiscal 21.” -Bill Newlands, president and CEO of Constellation Brands
"We continue to generate strong financial results despite headwinds related to COVID-19. Double digit free cash flow growth has enabled ongoing debt reduction and progress in achieving our targeted leverage goal" - Garth Hankinson, Chief Financial Officer
HIGHLIGHTS
“Despite the ongoing challenges of the pandemic, we deliver excellent Q2 results, as we continued to invest in brands and capabilities to drive sustainable long-term growth. We remain confident in the resiliency of our business, our brand health and consumer takeaway remain strong, and we are well positioned to deliver a solid year of organic growth in fiscal 21.” -Bill Newlands, president and CEO of Constellation Brands
"We continue to generate strong financial results despite headwinds related to COVID-19. Double digit free cash flow growth has enabled ongoing debt reduction and progress in achieving our targeted leverage goal" - Garth Hankinson, Chief Financial Officer
HIGHLIGHTS
- Despite COVID-related challenges, generates reported basis EPS of $2.62 and comparable basis EPS of $2.76, including Canopy Growth equity losses of $0.15; excluding Canopy Growth equity losses, achieved comparable basis EPS of $2.91
- Beer depletion growth remains strong; current production in Mexico maintained at normal levels
- Wine & Spirits Business delivers strong margin performance and double-digit Power Brand growth in IRI channels
- Generates $1.4 billion of operating cash flow and $1.2 billion of free cash flow, an increase of 2% and 10%, respectively
- Reduces debt by almost $600 million
- Announces a minority stake in Booker Vineyard's super-luxury, direct-to-consumer focused wine business, reinforcing the company's direct-to-consumer and 3-tier eCommerce initiatives
- Acquires remaining interest in Copper & Kings, a Kentucky-based craft spirits producer, broadening our premium spirits portfolio
- Declares quarterly cash dividend of $0.75 per share of Class A Common Stock and $0.68 per share of Class B Common Stock
- Fiscal 2021 guidance is unavailable at this time due to the uncertainty and potential impacts on the business from COVID-19
QUARTERLY DIVIDEND
On September 30, 2020, Constellation’s board of directors declared a quarterly cash dividend of $0.75 per share of Class A Common Stock and $0.68 per share of Class B Common Stock, payable on November 20, 2020, to stockholders of record as of the close of business on November 6, 2020. † A copy of this news release, including the attachments and other financial information that may be discussed during the call, will be available on our website cbrands.com under “Investors/Reporting” prior to the call.
CANOPY GROWTH INVESTMENT
Constellation’s share of Canopy Growth’s equity earnings and related activities for second quarter of fiscal 2021 totaled a loss of $31.0 million on a reported basis and a loss of $34.1 million on a comparable basis. Constellation has recognized a $64 million unrealized net gain in reported basis results since the initial Canopy in
On September 30, 2020, Constellation’s board of directors declared a quarterly cash dividend of $0.75 per share of Class A Common Stock and $0.68 per share of Class B Common Stock, payable on November 20, 2020, to stockholders of record as of the close of business on November 6, 2020. † A copy of this news release, including the attachments and other financial information that may be discussed during the call, will be available on our website cbrands.com under “Investors/Reporting” prior to the call.
CANOPY GROWTH INVESTMENT
Constellation’s share of Canopy Growth’s equity earnings and related activities for second quarter of fiscal 2021 totaled a loss of $31.0 million on a reported basis and a loss of $34.1 million on a comparable basis. Constellation has recognized a $64 million unrealized net gain in reported basis results since the initial Canopy in
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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 $136 a stock and its currently trading at $185.60 a stock. That's a strong return of 40.5% 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 $208.55 than it is to its 52 week low of $104.28 which to us is a clear indication that the short term sentiment and momentum of Constellation Brands stock is very positive at this point in time
The stock of Constellation Brands is trading at a lot closer to its 52 week high of $208.55 than it is to its 52 week low of $104.28 which to us is a clear indication that the short term sentiment and momentum of Constellation Brands stock is very positive at this point in time
Constellation Brands (STZ) vs Anheuser Busch InBev (ABI) stock over the last 5 years
The image below shows the stock price performance of Constellation Brands (STZ) and Anheuser Busch InBev (ABI) over the last 5 years. The two firms are two of the largest brewers and distillers in the world. And while they are active in the same industry their stock price trends and returns are very different though. The summary below shows the stock price returns of these two firms over the last 5 years:
The stock of Constellation Brands has easily outperformed that of Anheuser over the last 5 years.
- Constellation Brands: 40.5%
- Anheuser Busch InBev: -59.1%
The stock of Constellation Brands has easily outperformed that of Anheuser over the last 5 years.
Recent coverage of Constellation Brands
The extract below shows some of the latest coverage on Constellation Brands obtained from Investorplace.com
Constellation Brands (NYSE:STZ) earnings for the alcoholic beverage company’s fiscal second quarter of 2021 have STZ stock dipping lower on Thursday. That comes after reporting adjusted earnings per share of $2.76 and revenue of $2.26 billion. Both of these are better than Wall Street’s estimates of $2.51 per share and revenue of $2.19 billion.
Source: ShinoStock / Shutterstock.comHere’s what else is worth noting about the most recent Constellation Brands earnings.
Read the full article here
Constellation Brands (NYSE:STZ) earnings for the alcoholic beverage company’s fiscal second quarter of 2021 have STZ stock dipping lower on Thursday. That comes after reporting adjusted earnings per share of $2.76 and revenue of $2.26 billion. Both of these are better than Wall Street’s estimates of $2.51 per share and revenue of $2.19 billion.
Source: ShinoStock / Shutterstock.comHere’s what else is worth noting about the most recent Constellation Brands earnings.
- Adjusted per-share earnings are up 1% from $2.72 in the same period of the year prior.
- Revenue for the quarter comes in 4% lower than the $2.34 billion reported in fiscal Q2 2020.
- Operating income of $838.7 million is a 17% increase year-over-year from $719.5 million.
- The Constellation Brands earnings report also has net income coming in at $512.1 million.
- That’s a positive change from its net loss of $525.2 million from the same time last year.
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 model provides a target price (full value price) for Constellation Brands of $207.90 a stock (up slightly from our 1st quarter 2020 earnings report valuation of Constellation Brands). We therefore believe that the stock is undervalued at its price of $185.60
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 $207.90. So a good entry point into Constellation Brands stock would be at $187.10 or below. Since the stock of Constellation Brands (STZ) is trading at below our suggested entry point we rate the stock of Constellation as a Buy.
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 $207.90. So a good entry point into Constellation Brands stock would be at $187.10 or below. Since the stock of Constellation Brands (STZ) is trading at below our suggested entry point we rate the stock of Constellation as a Buy.
Next earnings release for Constellation Brands
It is expected that Constellation Brands (NYSE: STZ) will release their 2nd quarter 2021 earnings report in early October 2020