Constellation Brands Inc Class A

STZ: XNYS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$261.00	Vbs	Qrszfgbf

Constellation Brands Earnings: Profits Rise on Beer Resilience, but Wine and Spirits Still a Drag

Dan Su

Oct 3, 2024

We plan to maintain our $280 fair value estimate for wide-moat Constellation Brands after absorbing fiscal 2025 second-quarter results. Revenue grew 3%, led by a 6% increase in beer (87% of sales), which more than offset a 13% slump in wine and spirits. Adjusted earnings per share rose 14% on expense leverage and a lower share count due to buybacks. We are maintaining our fiscal 2025 projection for 6% sales growth and $13.70 in adjusted EPS and our 10-year forecast for 6% annual sales growth and operating margins in the low 30s. The shares look undervalued at a 12% discount to our intrinsic valuation.

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