Fundamental Analysis
Constellation Brands is the visionary company behind the beer, wine and spirits brands that you love and have celebrated with for over 70 years. Driven, smart, passionate and agile, we’re never content with the status quo, or playing it safe. We thrive on innovation and new ideas and are at our best when pushing our boundaries.
A wholly American-owned company, we produce quality, iconic brands such as Corona Extra, Modelo Especial, Ballast Point, Robert Mondavi, Kim Crawford, Ruffino, The Prisoner, SVEDKA Vodka and High West Whiskey, to name just a few.
We’ve come a long way from our humble beginnings in 1945 as a small wine producer in upstate New York.
Reasons to buy – CONSTELLATION BRANDS
High level decisions on buy or sell for a stock should be driven by
1. The margin that the company makes. i.e. Out of $1 that the company sells how much does the company taken home.
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- Here we see CONSTELLATION BRANDS makes a margin of 24% on Operating Level and about 25% on Net level. This means that out of $1 that it makes $0.25 is being pocketed as profits.
2. The growth rates of the company on revenue, net income, EPS and Dividend. i.e. If it sold $1 last year how much more did it sell this year.
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- Here we see net revenue growth of -0.7% in the revenue and the net profit figures grew by 22%.
3. The efficiency ratios of the company on Equity and Assets. i.e. How well is the company able to sweat each $1 that it puts to work in the company.
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- Here we see CONSTELLATION BRANDS makes a Return on Assets of 10% and Return of Equity of 25% which is pretty good.
Given that drinking is a affliction that affects almost the entire population except for kids below 20(i hope), Constellation Brands needs to be in your bucket. Note that the Revenue Growth doesn’t match up anywhere close to our threshold of 10% we are still positive on this stock since this is a long term business that is going to grow as long as human beings drink. Off course this might not be the preferred brand but then we can always select the biggest brand. Note also the exception margins that such sin good companies enjoy.
And then there is also cannabis-infused beverages that it owns through Canopy Growth Corporation(ticker name WEED-CA). So maybe not worth debating on whether to invest or not.
GOLD STANDARD : This is one of the no-debate stocks that are a must have in ones portfolio.
All these ratios can be found in the attached excel sheets and are based on the EDGAR report submitted by CONSTELLATION BRANDS to the SEC. All the data on the above analysis can be found at the link below
Balance Sheet
Income Statement
