Asset Breakdown
22.7 B
Assets Non Current
11.3 B
Goodwill
Tax Assets
Current Assets
| Total Assets | 26.34 Billion | |
| Current Assets | 3.67 Billion | |
| Assets Non Current | 22.68 Billion | |
| Goodwill | 11.26 Billion | |
| Tax Assets | 2.4 Billion |
Continue to hold Constellation (USA Stocks:STZ) based on its current debt obligations?
 | By Vlad Skutelnik | Macroaxis Story |
Constellation Brands, a prominent player in the Beverages - Wineries & Distilleries industry, presents an intriguing investment opportunity this February. Despite a Total Risk Alpha of -0.37, indicating a potential loss, the company's robust Free Cash Flow of $1.7B and substantial Retained Earnings of $12.3B suggest a strong financial backbone. Furthermore, with a Mean Deviation of 0.97, the stock's price volatility is relatively low, which could be appealing for investors seeking a stable investment. However, potential investors should also consider the company's high Total Liabilities of $15.9B and Long Term Debt Total of $11.3B, which could impact its leverage position.
Key Takeaways
Constellation Brands carries a debt of 12.46 billion, with a debt to equity (D/E) ratio of 1.13. This ratio is acceptable within its current industry classification. The company's current ratio stands at 1.37, which is standard for the industry and considered normal. Debt can support Constellation Brands until it faces difficulties in paying it off, either with new capital or free cash flow. Therefore, if the company fails to meet its legal obligations to repay its debt, Constellation Brands' shareholders could potentially lose their entire investment. However, a more common scenario is when companies like Constellation Brands issue additional shares at discounted prices, thereby diluting the value of existing shares. In such instances, debt can be a superior tool for Constellation Brands to invest in growth at high rates of return. When evaluating Constellation Brands' use of debt, it is essential to consider it in conjunction with cash and equity.Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.
Reviewed by Gabriel Shpitalnik
As we step into February, it's time to consider the potential of Constellation Brands, a leading player in the Beverages sector listed on the NYSE. With a robust net invested capital of $20.9B and a strong equity base of $8.4B, the company's financial leverage is noteworthy. Despite operating expenses of $1.9B and a long-term debt of $11.3B, Constellation Brands has managed to maintain a healthy gross profit of $4.8B. With a strong buy consensus among analysts and a promising dividend yield of 1.46%, this domestic primary company is worth considering for investment this month. Constellation Brands is set to release its earnings report tomorrow. The forthcoming quarterly report is slated for the 5th of January, 2024. Currently, the company's Current Ratio remains fairly stable in comparison to the previous year. The Debt to Equity Ratio is projected to increase to 1.28 in 2024, while the Net Income Per Employee is expected to decrease to $1.3K in 2024. Given that many millennials are steering clear of the beverage sector, it's logical to delve deeper into Constellation Brands Class and attempt to decipher its current market trends. I will discuss a few potential reasons why investors currently undervalue this stock.Constellation Brands financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Constellation Brands, including all of Constellation Brands's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Constellation Brands assets, the company is considered highly leveraged. Understanding the composition and structure of overall Constellation Brands debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.
Understanding Constellation Total Debt
Constellation Brands liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Constellation Brands has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Constellation Brands balance sheet include debt obligations and money owed to different Constellation Brands vendors, workers, and loan providers. Below is the chart of Constellation main long-term debt accounts currently reported on its balance sheet. You can use Constellation Brands Class financial leverage analysis tool to get a better grip on understanding its financial positionHow important is Constellation Brands's Liquidity
Constellation Brands financial leverage refers to using borrowed capital as a funding source to finance Constellation Brands Class ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Constellation Brands financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Constellation Brands' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Constellation Brands' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Constellation Brands's total debt and its cash.
Detailed Perspective On Constellation Brands
The current indifference towards the small price fluctuations of Constellation Brands created some momentum for investors as it was traded today as low as 241.86 and as high as 243.56 per share. The company directors and management did not add any value to Constellation Brands investors in December. However, most investors can still diversify their portfolios with Constellation Brands to hedge their inherited risk against high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 1.18. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.
Buy low, sell high. This age-old investment wisdom may apply to Constellation Brands this February.Despite a challenging market environment, the company's financials reveal a strong position. With a current ratio of 1.40X, Constellation Brands demonstrates a healthy balance sheet, capable of meeting short-term obligations. The company's operating income stands at a robust $2.8B, indicating a solid operational efficiency. Furthermore, the company's market capitalization of $44.8B and a forward dividend yield of 0.0146 suggest a potential for growth and income for investors. However, investors should also consider the company's risk-adjusted performance of -0.02 and a probability of bankruptcy at 15.45%. Despite these risks, the potential rewards may make Constellation Brands a stock to watch this February. .
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This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Constellation Brands Class. Please refer to our Terms of Use for any information regarding our disclosure principles.