Resilient Beer Demand Buoys Growth Outlook for Wide-Moat Constellation Brands; Shares Undervalued

We don’t plan to materially change our $274 fair value estimate for wide-moat Constellation Brands, after absorbing the brewer’s solid fiscal 2023 (ended in February) full-year results that included revenue of $9.5 billion and adjusted EPS of $10.65 (excluding impairments in the Canopy investment), which are both within a stone’s throw from our estimates ($9.5 billion and $10.74 billion, respectively). Our 10-year forecast for mid-single-digit sales growth and operating margins averaging 33% remain in place. Current share price implies an 18% discount, which we view as offering a good entry point for long-term investors.