CONSTELLATION BRANDS, INC. (STZ): what the price requires
The current priced-in claim for CONSTELLATION BRANDS, INC. (STZ) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/STZ
Headline
| Field | Value |
|---|---|
| Ticker | STZ |
| Company | CONSTELLATION BRANDS, INC. |
| Sector / Industry | Consumer Defensive |
| Current price | $134.07/sh |
| Composition | Beer 91% / Wine and Spirits 9% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Multiple paid | 11x operating income |
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 6.7% cost of capital with 4% terminal growth over a 5-year stage.
Reconcile: at the x-ray's 9.3% required return this reads ~-0.8%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.53σ |
| cohort percentile (of 69 peers) | 12 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.12x | 4 | expensive |
| Earnings | 3.01x | 3 | expensive |
| Relative | 1.25x | 3 | expensive |
| Growth | 2.00x | 4 | expensive |
Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.4%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $58.62 | 2.29x | yes | FCF base $1.8B, growth -10% (input: historical growth), terminal g 0.5%, WACC 6.4%, 5yr projection |
| DCF Exit Multiple | Growth | $135.97 | 0.99x | yes | Exit EV/EBITDA: 9.3x / 11.3x / 13.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $107.55 | 1.25x | yes | P/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $75.93 | 1.77x | yes | Stage 1: 5% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $101.87 | 1.32x | yes | BV/sh $45.15, ROE (TTM) 20.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $151.72 | 0.88x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $59.95 | 2.24x | yes | Rev $9.6B, growth -11% (input: historical growth; tapered), Terminal P/S: 2.1x / 2.5x / 2.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $96.24 | 1.39x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.87B × (1−36%) / WACC 6.4% → EPV (no growth) |
| Residual Income | Asset | $144.90 | 0.93x | yes | BV $45.15 + 5yr PV of (ROE (TTM) 20.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $181.83 | 0.74x | yes | EBITDA $3.14B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $44.48 | 3.01x | yes | FCF $1794.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $40.31 | 3.33x | yes | SBC-adj FCF $1.72B (FCF $1.79B − SBC $0.07B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $10.21 | 13.13x | yes | BV $45.15 × (ROIC 1.4% / WACC 6.4%) |
| P/Sales Sector | Relative | $107.55 | 1.25x | yes | Revenue $9.63B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $10.5b |
| Net debt / NOPAT (after-tax) | 5.33x |
| Net debt / operating income (pre-tax) | 3.41x |
| Interest coverage | 8.0x |
| Burning cash | no |
Bullet Takeaways
- Constellation Brands is now essentially a Mexican beer royalty stream, with Beer at 91 percent of revenue behind Modelo, Corona, and Pacifico, brewed in Mexico for the U.S. market, which concentrates both the franchise strength and the tariff exposure in a single border crossing.
- The market is paying about 11x operating income at $133.99 (July 10, 2026), below what even a 5 percent annual operating-profit decline would warrant, so the price already assumes erosion; the biggest specific risk is that the erosion is structural, with depletions slightly negative and beer margins absorbing a 340 basis point hit from aluminum tariffs last quarter.
- Watch the depletion trend and the fiscal 2027 guidance rails: management affirmed comparable EPS of $11.20 to $11.90 and beer operating margins of 37 to 38 percent, but withdrew its fiscal 2028 outlook citing tariff uncertainty.
Bull Case
The earnings line is quietly moving the right way while the stock price tells a catastrophe story. In the quarter ended May 31, 2026, GAAP diluted EPS rose 31 percent to $3.79 and comparable EPS rose 7 percent to $3.43, both ahead of consensus; beer net sales grew 2 percent to $2.28 billion on shipment growth of 1.8 percent and continued pricing power, and depletions slipped just 0.3 percent against a consumer backdrop that has flattened most of the beverage aisle. That is not a business in decline; it is a business holding volume roughly flat while growing dollars, absorbing a 340 basis point tariff hit to beer margins, and still delivering EPS growth. Management affirmed full-year comparable EPS guidance of $11.20 to $11.90, which puts today's $133.99 near 11 to 12 times the company's own labeled forward earnings.
The portfolio behind those numbers has been deliberately concentrated into its best asset. Wine and spirits divestitures shrank the reported top line but left Beer at 91 percent of revenue, anchored by brands the 10-K describes through a strategy of "continuing to grow our high-end imported beer brands through maintenance of leading margins". Even in a soft quarter for the flagships, the bench showed depth: Pacifico, Victoria, and the Modelo Chelada line grew while Modelo Especial and Corona Extra were soft, and new-product cadence continues, with Corona Sunbrew moving from select markets to a nationwide launch. Beer operating margins guided at 37 to 38 percent remain the envy of the category, and roughly 90 percent of fiscal 2027 aluminum needs are hedged, capping the tariff bleed that spooked the market.
Meanwhile the price sits below what even a 5 percent annual operating-profit decline would warrant, in the lower half of the consumer-staples peer range, with the asset-value and sector-multiple lenses landing at or above today's level. Return on equity runs near 21 percent on the trailing basis. A 21 percent ROE branded franchise, guiding to flat-to-growing beer sales, priced for perpetual decline: the bull case is that any outcome short of structural decay re-rates it, and the fastest catalyst would be nothing more exotic than two consecutive quarters of positive depletions.
Bear Case
The price rests on one load-bearing assumption: that the Mexican beer franchise, which is now 91 percent of revenue, is a flat-to-growing annuity rather than a peaked one. Every other number is downstream of it, and it is precisely the assumption the recent data stresses. Depletions went slightly negative last quarter, with the two flagship brands, Modelo Especial and Corona Extra, both soft; the growth came from smaller brands and pricing. The franchise's core consumer skews Hispanic, a demographic whose spending has been disproportionately pressured, and the broader category faces a slow-bleed moderation trend among younger drinkers. If flat depletions are the new baseline rather than a cyclical trough, then a price that discounts 5 percent annual decline is not obviously cheap; it is approximately right.
The second fragile assumption is that tariffs stay a manageable line item. The 10-K lists "economic and other uncertainties associated with our international operations, including new or increased tariffs" among its principal risks, and the exposure is structural: the beer that generates nearly all the profit is brewed in Mexico and crosses a border whose trade terms are being renegotiated in real time. Aluminum tariffs already cost beer margins 340 basis points last quarter, the hedges that cap this year's damage expire into whatever prices prevail next year, and management's own confidence horizon has shortened, with the fiscal 2028 outlook withdrawn outright over tariff uncertainty. A company that cannot see two years ahead is asking investors to underwrite what it will not.
The balance sheet and the remnant portfolio limit the margin for error. Net debt of $10.5 billion runs about 3.9 times trailing operating income with interest covered 7.5 times, serviceable but heavy for a business whose growth engine has stalled, and trailing GAAP earnings are negative after the wine-and-spirits impairments, a reminder that the last diversification chapter ended in write-downs. The filing's own hope that "beyond Fiscal 2026 our wine and spirits business will return to net sales growth" has been overtaken by divestitures. What remains is a single-category, single-supply-chain, tariff-exposed franchise at peak U.S. penetration. The earnings-power and cash-flow lenses read today's price at two to three times what a no-growth version of this business supports, which is the sober way of saying the price still assumes the beer machine never actually declines. The bear case is that it already started.
Valuation
Start with what the price does not require: growth. At about 11 times company-wide operating income, $133.99 sits below what even a 5 percent annual operating-profit decline would warrant, a multiple in the lower half of the peer range and within what the company has recently delivered. The market has already run the bear case through the price. The live question is only whether the decline it discounts is too pessimistic, about right, or not pessimistic enough.
The method families split along that exact line. The asset-value and peer-multiple lenses effectively support the price, with the sector EV/EBITDA read landing about 26 percent above it and the exit-multiple cash-flow read at parity holding today's roughly 11x EV/EBITDA flat. The earnings-power and growth-DCF families read the price as two to three times what they defend, but both inherit a distorted trailing base: the cash-flow projections carry the negative revenue growth of the wine-and-spirits divestiture years (the engine's inputs show trailing revenue shrinking around 10 percent annually, which is portfolio surgery, not demand), and trailing GAAP earnings are negative on impairment charges even as the company guides fiscal 2027 GAAP EPS to $11.50 to $12.20. Reconciled, the picture is a value-supported name whose statistical record looks worse than its operating reality, priced accordingly.
What has to be true is narrow: beer net sales inside the guided minus 1 to plus 1 percent, beer operating margins holding the guided 37 to 38 percent against tariff costs (about 90 percent of this year's aluminum is hedged), and depletions stabilizing near flat. The current trailing operating margin runs about 28 percent company-wide. Solvency is the pressure point worth watching rather than fearing: $10.5 billion of net debt at roughly 3.9 times trailing operating income (pre-tax basis) with 7.5 times interest coverage leaves the dividend and deleveraging fundable from the roughly $1.8 billion of trailing free cash flow, but removes the balance-sheet slack that would make a genuine volume decline comfortable. The decisive number for this price is the depletion trend, printed four times a year.
Catalysts
The first-quarter fiscal 2027 report on June 30 reset the near-term picture: net sales of $2.43 billion fell 3 percent on the smaller wine business, but beer net sales rose 2 percent to $2.28 billion, GAAP diluted EPS rose 31 percent to $3.79, comparable EPS rose 7 percent to $3.43 (both beats), and fiscal 2027 guidance was affirmed at $11.50 to $12.20 GAAP EPS and $11.20 to $11.90 comparable EPS with beer margins of 37 to 38 percent. The next print, on the early-October cadence, carries the depletion trend as its headline number: last quarter's minus 0.3 percent, with Modelo Especial and Corona Extra soft but Pacifico, Victoria, and the Chelada line growing, sits right at the boundary between stabilization and erosion.
Tariff policy is the exogenous catalyst in both directions. Aluminum tariffs cost beer margins 340 basis points last quarter; roughly 90 percent of fiscal 2027 aluminum needs are hedged, so the current-year damage is largely capped, but management withdrew its fiscal 2028 outlook citing tariff uncertainty, which converts every trade-policy headline into a stock event. Any clarity on Mexican import terms, favorable or hostile, would move the multiple more than a quarter's operations.
The slower threads: execution of the high-end beer strategy the 10-K describes (distribution gains for key brands, the nationwide Corona Sunbrew launch), the final shape of the slimmed wine-and-spirits rump after divestitures, and capital allocation between the dividend, buybacks, and paying down the $10.5 billion net debt stack. With the price already discounting operating decline, the setup is asymmetric around the depletion number: consecutive positive prints would do more for the stock than any single earnings beat.
Peer Cohorts (Per Segment, With Filing Citations)
Beer (reported)
- BUD (Anheuser-Busch InBev SA/NV)
- (no filing in the citation store)
- TAP (MOLSON COORS BEVERAGE CO)
- (no filing in the citation store)
- SAM (THE BOSTON BEER COMPANY, INC.)
- (no filing in the citation store)
- ABEV (AMBEV S.A.)
- (no filing in the citation store)
Wine and Spirits (reported)
- DEO (DIAGEO plc)
- (no filing in the citation store)
- BF-B (Brown-Forman Corporation)
- (no filing in the citation store)
- BF-A (Brown-Forman Corporation)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
company Q1 FY2027 results, June 30, 2026 · company Q1 FY2027 release · company Q1 FY2027 results; company FY2025 10-K · company Q1 FY2027 release and coverage