– Constellation beer portfolio consists of Modelo, Corona, Pacifico, Victoria, and Funky Buddha.
– STZ underperformed recently due to concerns around slowing beer revenue growth and FY23/FY24 beer operating margin pressure.
– While valid, the concerns are more of a transitory short-term issue rather than long-term structural changes.
– Currently, the company is attractively valued relative to peers, its historical valuation, and its growth rate.
– Important positive developments include the Sands controlling share class elimination and STZ’s commitment to improved capital allocation.
– Trades at 14.7x FY24 EV/EBITDA and 13.3x FY25 EV/EBITDA.
– This compares to staples trading at 14.1x FY2 EV/EBITDA and beverages at 16.7x.
Exp. gain: Not specified.
Full write-up (free guest account required):
Constellation Brands (STZ), mcap=$40.5bn, price $220 vs $225