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Category: Stock Market and Constellation Brands
Date: 10 January 2020 Stock Price: $193.12 We take a look at the 3rd 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 and a equity investor in Canadian cannabis company, Canopy
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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' 3rd quarter 2020 earnings report
- Net sales: $1.999 billion (up from $1.972 billion for the same quarter of the previous year)
- Net sales increased by 1.37% over the last 12 months
- Cost of sales: $1.011 billion (up from $1.002 billion for the same quarter of the previous year)
- Cost of sales increased by 0.89% over the last 12 months
- Net loss:$366.5 million (up rom $312 million for the same quarter of the previous year)
- Diluted earnings per share: $1.85 (up from $1.56 per share for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 194.856 million (up from 194.820million for the same quarter of the previous year)
- Cash and cash equivalents: $93.7 million
- Cash and cash equivalents per share: $0.48
- Cash and cash equivalents makes up 0.25% of Constellation's market capital
- Cash and cash equivalents makes up 0.34% 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: $808.3 million
- Accounts receivable makes up 2.98 % of Constellation's total assets
- Inventories: $1.358 billion
- Inventories makes up 5.01% of Constellation's total assets
- Goodwill: $7.771 billion
- Goodwill makes up 28.6% 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 $39.88 a Constellation Brands stock
- Stockholders equity of Constellation': $12.036 billion
- Stockholders equity per share for Constellation Brands : $61.8
- So Constellation brands is trading at 3.1 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
”It’s shaping up to be a dynamic year at Constellation. We delivered strong performance in Q3 powered largely by our beer business and we are increasing our EPS and cash flow guidance for the year. Our Wine & Spirits transformation strategy is gaining traction and our revised agreement with Gallo paves the way for accelerated growth and margin performance for this business going forward.” said Bill Newlands, President and Chief Executive Office
“The strong free cash flow we generated year to date reflects the powerful cash generation capability of our core business and will enable the company to return $4.5 billion in cash to shareholders in share repurchases and dividends through fiscal 2022. In addition, with debt reduction of almost $1.3 billion so far this year, we’ve made significant progress toward achieving our leverage target of less than four times.” said David Klein , Chief Financial Officer
Below the outlook provided by Constellation Brands for the FY20 earnings estimate (as well as their earnings estimate excluding the equity accounted numbers of loss making Cannabis group Canopy
”It’s shaping up to be a dynamic year at Constellation. We delivered strong performance in Q3 powered largely by our beer business and we are increasing our EPS and cash flow guidance for the year. Our Wine & Spirits transformation strategy is gaining traction and our revised agreement with Gallo paves the way for accelerated growth and margin performance for this business going forward.” said Bill Newlands, President and Chief Executive Office
“The strong free cash flow we generated year to date reflects the powerful cash generation capability of our core business and will enable the company to return $4.5 billion in cash to shareholders in share repurchases and dividends through fiscal 2022. In addition, with debt reduction of almost $1.3 billion so far this year, we’ve made significant progress toward achieving our leverage target of less than four times.” said David Klein , Chief Financial Officer
Below the outlook provided by Constellation Brands for the FY20 earnings estimate (as well as their earnings estimate excluding the equity accounted numbers of loss making Cannabis group Canopy
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 $107 a stock and its currently trading at $193.12 a stock. That's a very strong return of 80.5% 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 $214.48 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.
The stock of Constellation Brands is trading at a lot closer to its 52 week high of $214.48 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.
Recent coverage of Constellation Brands
The extract below shows some of the latest coverage on Constellation Brands obtained from TheStreet.com
Shares of Constellation Brands (STZ) - Get Report were climbing Wednesday, up 4.2% after better-than-expected third-quarter earnings. It’s been a bumpy ride so far in the day, but for now bulls are winning the battle. Shares gapped higher at the open and flushed down to negative territory, before the stock found its footing and rallied higher.
Earnings of $2.14 a share beat estimates by 30 cents, while revenue of $2 billion grew 1.5% year over year and topped expectations by $50 million. A blowout quarter? Not necessarily. But investors have been waiting for some positive news to take Constellation Brands higher, while the charts have been cooperating more on the long side. Shares still face some overhead resistance, but if the stock can clear it Constellation could gain momentum.
Read the full article here
Shares of Constellation Brands (STZ) - Get Report were climbing Wednesday, up 4.2% after better-than-expected third-quarter earnings. It’s been a bumpy ride so far in the day, but for now bulls are winning the battle. Shares gapped higher at the open and flushed down to negative territory, before the stock found its footing and rallied higher.
Earnings of $2.14 a share beat estimates by 30 cents, while revenue of $2 billion grew 1.5% year over year and topped expectations by $50 million. A blowout quarter? Not necessarily. But investors have been waiting for some positive news to take Constellation Brands higher, while the charts have been cooperating more on the long side. Shares still face some overhead resistance, but if the stock can clear it Constellation could gain momentum.
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 $191.60 a stock (down slightly from our 2nd quarter 2020 earnings report valuation of Constellation Brands). 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 $191.60. So a good entry point into Constellation Brands stock would be at $172.40 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 the losses suffered by Constellation Brands on their Canopy investment cost the group $0.25 in earnings per share.
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 $191.60. So a good entry point into Constellation Brands stock would be at $172.40 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 the losses suffered by Constellation Brands on their Canopy investment cost the group $0.25 in earnings per share.
Next earnings release for Constellation Brands
It is expected that Constellation Brands (NYSE: STZ) will release their 4th quarter and full 2020 earnings report in early April 2020