STZ - Embedded Expectations Analysis - 2021 05 11
Constellation Brands, Inc. (STZ:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 43.2x Uniform P/E. Even at these levels, the market is pricing in bearish expectations for the firm. That said, given management's confidence about portfolio growth acceleration, brand retail initiatives, and Corona Premier market penetration, market expectations are still too bearish, suggesting equity outperformance is warrantedSpecifically, management is confident their aggressive investments will accelerate growth for their portfolio, their beer portfolio delivered 13 million case growth in 2020, and that Corona Premier is penetrating the betterment market faster than competitors. Moreover, they are confident in their ability to execute their experiential brand retail initiatives and that they are hedging against higher inflation
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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