Transferring Coverage of Narrow-Moat Constellation Brands; Raising Fair Value; Shares Still Heated
We are transferring coverage of Constellation Brands to a new analyst and raising our fair value estimate to $152 per share from $136. Our revised outlook incorporates assumptions for improved growth in the wine segment, more substantial margin expansion, and lower tax rates (averaging 22% over our 10-year forecast) due to corporate tax reform in the United States. This valuation implies a 2017 price/earnings multiple of 19 times and enterprise value/adjusted EBITDA above 14 times. Our outlook a...Constellation Brands is an international beverage alcohol company. The company is a producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. The company has two segments: Beer, in which the company is engaged in the U.S. beer market that includes the imported, craft, domestic super premium, and alternative beverage alcohol categories and it has the right to import, market and sell these Mexican beer brands in the U.S.; and Wine and Spirits, in which its wine portfolio is supported by grapes purchased from independent growers, primarily in the U.S., New Zealand and Chile, and vineyard holdings in the U.S., New Zealand and Italy.
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