STZ - Embedded Expectations Analysis - 2020 08 19
Constellation Brands, Inc. (STZ:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 34.1x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may have concerns about growth, M&A, and CanopySpecifically, management may lack confidence in their ability to sustain import growth, beer business performance, and annual beer price growth. In addition, they may be overstating the demand during the Memorial Day and Cinco de Mayo holidays, the innovation from their Woodbridge family spirit barrels, and the potential of their Empathy Wines acquisition. Furthermore, they may have concerns about the coronavirus environment, their ability to divest their Paul Masson Grande Amber Brandy business at acceptable valuations, and continued declines in net sales. Additionally, management may be exaggerating Canopy's ability to win in the emerging cannabis space, and they may lack confidence in their ability to make up the beer production slowdown in Mexico. Finally, they may be concerned about their ability to engage with customers through marketing efforts given the cancellation of many sporting events
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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