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Where Constellation Brands’ Valuation Stands prior to Q3 Results



Company valuation multiple

As of December 26, Constellation Brands’ (STZ) was trading at a 12-month forward PE (price-to-earnings) ratio of 25.6x. The company’s valuation multiple has risen 6.9% since the announcement of its fiscal 2Q18[1. Fiscal 2Q18 ended on August 31, 2017] results in October 2017. The company exceeded analysts’ expectations for fiscal 2Q18 and raised its earnings guidance for full-year fiscal 2018 on strong results of the beer segment.

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Valuation of peers

Constellation Brands is currently trading at a higher valuation multiple than its alcoholic beverage peers Anheuser-Busch InBev (BUD) and Molson Coors Brewing (TAP) but lower than Brown-Forman (BF.B). As of December 26, Anheuser-Busch InBev, Molson Coors Brewing, and Brown-Forman were trading at a 12-month forward PE of 21.4x, 17.1x, and 33.6x, respectively.

Constellation Brands and its peers are trading at higher valuation multiple than the S&P 500 Index (forward PE of 19.2x).

The 12-month forward PE multiple varies among companies based on factors like their business models, growth expectations, and risk profile.

Growth estimates

Currently, analysts expect the company’s sales to rise 4.2% to $7.6 billion in full-year fiscal 2018, which ends on February 28, 2018. Analysts expect the company’s adjusted EPS to rise 24.6% to $8.42 in fiscal 2018. Based on the guidance issued in October 2017, the company expects its full-year adjusted EPS in the $8.25 to $8.40 range in fiscal 2018 compared to $6.76 in fiscal 2017.

We’ll look at analysts’ recommendations for Constellation Brands stock in the concluding part of this series.


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