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Category: Constellation Brands and Stock Market
Last updated: 26 May 2020 Stock price: $177.42 On this page we will look to provide more details about Constellation Brands, the no 3. beer company in the U.S and owner of well known beer brands such as Corona and Modelo
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About Constellation Brands (NYSE: 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.
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.
Quick facts about Constellation Brands
- Main brands of Constellation include: Corona, Modelo and Casa Noble Tequila
- 9,800 employees. Approximately 4,900 employees were in the U.S. and approximately 4,900 employees were outside of the U.S., primarily in Mexico
- Annual net sales in 2019: $8.116 billion
- Beer sales makes up 64.1% of the group's total sales
- Number 3 beer company in the U.S
- Total assets: $29.231 billion
- Stockholders equity: $12.83 billion
- Shares in issue: 167.249 million shares
- Dividend declared during 2019 fiscal year: $2.96
Strategy of Constellation Brands
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.
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.
Constellation Brands sales mix
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:
Corona Brand Family
Wine Brands
Wine Portfolio of Brands
Spirits 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 Especial
- Modelo Negra
- Modelo Chelada
- 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
Competition of Constellation Brands
The beverage alcohol industry is highly competitive. We compete on the basis of quality, price, brand recognition and distribution strength. Our beverage alcohol products compete with other alcoholic and nonalcoholic beverages for consumer purchases, as well as shelf space in retail stores, restaurant presence and wholesaler attention. We compete with numerous multinational producers and distributors of beverage alcohol products, some of which have greater resources than we do.
Below the competitors as mentioned by Constellation Brands
Below the competitors as mentioned by Constellation Brands
- Beer: Anheuser-Busch InBev, Molson Coors, Heineken, Pabst Brewing Company, The Boston Beer Company, Mark Anthony
- Wine: E. & J. Gallo Winery, The Wine Group, Trinchero Family Estates, Treasury Wine Estates, Ste. Michelle Wine Estates, Deutsch Family Wine & Spirits, Jackson Family Wines
- Spirits: Diageo, Beam Suntory, Brown-Forman, Sazerac Company, Pernod Ricard
Trademarks and distribution agreements, seasonality of the business and employees
Trademarks are an important aspect of our business. We sell products under a number of trademarks, which we own or use under license. Throughout our segments, we also have various licenses and distribution agreements for the sale, or the production and sale, of our products and products of third parties. These licenses and distribution agreements have varying terms and durations. Within the Beer segment, we have an exclusive sub-license to use trademarks related to our Mexican beer brands in the U.S. This sub-license agreement is perpetual. Prior to our June 2013 acquisition of the imported beer business, Crown Imports had exclusive importation agreements with the suppliers of certain imported beer products and had an exclusive renewable sub-license to use certain trademarks related to the imported beer brands in the U.S
Seasonality of our business
The beverage alcohol industry is subject to seasonality in each major category. As a result, in response to wholesaler and retailer demand which precedes consumer purchases, our beer sales are typically highest during the first and second quarters of our fiscal year, which correspond to the Spring and Summer periods in the U.S. Our wine and spirits sales are typically highest during the third quarter of our fiscal year, primarily due to seasonal holiday buying.
Employees
As of February 28, 2019, we had approximately 9,800 employees. Approximately 4,900 employees were in the U.S. and approximately 4,900 employees were outside of the U.S., primarily in Mexico. We may employ additional workers during the grape crushing seasons. Approximately 21% of our employees are covered by collective bargaining agreements. Collective bargaining agreements expiring within one year are minimal. We consider our employee relations generally to be good
The beverage alcohol industry is subject to seasonality in each major category. As a result, in response to wholesaler and retailer demand which precedes consumer purchases, our beer sales are typically highest during the first and second quarters of our fiscal year, which correspond to the Spring and Summer periods in the U.S. Our wine and spirits sales are typically highest during the third quarter of our fiscal year, primarily due to seasonal holiday buying.
Employees
As of February 28, 2019, we had approximately 9,800 employees. Approximately 4,900 employees were in the U.S. and approximately 4,900 employees were outside of the U.S., primarily in Mexico. We may employ additional workers during the grape crushing seasons. Approximately 21% of our employees are covered by collective bargaining agreements. Collective bargaining agreements expiring within one year are minimal. We consider our employee relations generally to be good
Constellation Brands stock performance
Set forth below is a line graph comparing, for the fiscal years ended the last day of February 2015, 2016, 2017, 2018 and 2019, the cumulative total stockholder return of the Company’s Class A Common Stock and Class B Common Stock with the cumulative total return of the S&P 500 Index, and the S&P 500 Food & Beverages Index. We have selected the S&P 500 Food & Beverage Index because we believe the diversified companies in this index provide a relevant comparison. The graph assumes the investment of $100.00 on February 28, 2014 in the Company’s Class A Common Stock, the Company’s Class B Common Stock, the S&P 500 Index, and the S&P 500 Food & Beverages Index, and also assumes the reinvestment of all dividends
A $100 invested at the end of February 2014 would have resulted in an investment worth $244.53 as at the end of February 2019. That is an annual growth rate of 16.87% over the last 5 years, which is very strong returns provided to stockholders, this while the S&P 500 provided an average annual return of 10.67%. So the stock of Constellation Brands has grown at 1.58 times that of the S&P 500.
Our latest Constellation Brands stock valuation (4 April 2020)
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 $204.70 a stock (up lightly from our 3rd quarter 2020 earnings report valuation of Constellation Brands). We therefore believe that the stock is undervalued.
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 $204.70. So a good entry point into Constellation Brands stock would be at $184.20 or below.
We expect the stock of Constellation brands to remain around current levels in the short run until the market settles and the Coronavirus pandemic blows over and life returns to normal across the globe. And we expect the stock of Constellation Brands to surge once some form of normalcy returns to economies across the country.
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 $204.70. So a good entry point into Constellation Brands stock would be at $184.20 or below.
We expect the stock of Constellation brands to remain around current levels in the short run until the market settles and the Coronavirus pandemic blows over and life returns to normal across the globe. And we expect the stock of Constellation Brands to surge once some form of normalcy returns to economies across the country.