uploads///STZ Valuation

Where STZ’s Valuation Stands prior to Its Fiscal 4Q18 Results

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Mar. 27 2018, Updated 6:32 a.m. ET

12-month forward PE

On March 23, 2018, Constellation Brands (STZ) was trading at a 12-month forward PE (price-to-earnings ratio) of 23.7x. The company’s forward valuation multiple has fallen 0.3% since its announcement of its fiscal 3Q18 results in January 2018.

Constellation Brands exceeded analysts’ earnings expectations but lagged their sales expectations in fiscal 3Q18. However, the company raised its fiscal 2018 earnings guidance. Constellation Brands’ valuation multiple is currently higher than the S&P 500 Index’s forward PE of 17.0x.

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Peer comparison

Constellation Brands is currently trading at a higher forward PE than Anheuser-Busch InBev (BUD) and Molson Coors Brewing (TAP) but at a lower forward PE than Brown-Forman (BF.B). On March 23, 2018, Anheuser-Busch InBev, Molson Coors Brewing, and Brown-Forman were trading at 12-month forward PEs of 19.6x, 14.0x, and 31.5x, respectively.

The forward PE multiple differs among companies in the same sector based on factors such as growth expectations.

Analysts’ expectations

Analysts expect Constellation Brands’ sales to rise 3.2% to $7.6 billion in fiscal 2018, which ended on February 28, 2018. The company’s adjusted EPS are expected to rise 26.9% to $8.58 in fiscal 2018. Continued demand for the company’s Mexican beer brands is expected to drive its fiscal 2018 performance. However, slower growth in the wine business and the impact of the company’s divestiture of the Canadian wine business are expected to drag on its fiscal 2018 results.

Currently, analysts expect Constellation Brands’ sales and adjusted EPS to rise 7.5% and 12.4%, respectively, in fiscal 2019.

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

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