October 24, 2024
Top 10 Stock Constellation Brands Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Constellation Brands – Top 10 Stock in S&P 500 Consumer Staples Index
Constellation Brands is listed as a top 10 stock on October 24, 2024 in the market index S&P US Consumer because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is growing above average and professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 69 (high 69% performer), Obermatt assesses an overall buy recommendation for Constellation Brands on October 24, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Distillers & Vintners |
| Index | S&P US Consumer, S&P US Food & Beverage, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Constellation Brands Buy
| 360 METRICS | October 24, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 35 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 42 |
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| SENTIMENT | ||||||||
| SENTIMENT | 97 |
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| 360° VIEW | ||||||||
| 360° VIEW | 69 |
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ANALYSIS: With an Obermatt 360° View of 69 (better than 69% compared with alternatives), overall professional sentiment and financial characteristics for the stock Constellation Brands are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Constellation Brands. The consolidated Growth Rank has a good rank of 53, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 53% of competitors in the same industry. The consolidated Sentiment Rank also has a good rank of 97, which means that professional investors are more optimistic about the stock than for 97% of alternative investment opportunities. But the consolidated Value Rank has a less desirable rank of 35, which means that the share price of Constellation Brands is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 65% of alternative stocks in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 42, which means that the company has a financing structure that is riskier than those of 58% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 69, Constellation Brands is better positioned than 69% of all alternative stock investment opportunities based on the Obermatt Method. Only half of the consolidated Obermatt Ranks exhibit excellent performance, so one needs to take a close look. Growth is above-average (Growth Rank of 53), and professional market sentiment is positive (Sentiment Rank of 97), but value and safety are below average. The Safety Rank is the least significant of the four consolidated ranks, because it only reflects financing practices. In the case of high growth, aggressive financing is a good thing. So the question is: How to assess below-average value against above-average growth and sentiment? Growth may be the strongest driver of the investment rationale in this case, which is reflected in institutional investors' opinions. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much do you sacrifice value for growth? You can use the following rule of thumb: If you take 100 minus the growth rank, you arrive at a possibly minimum level for the value rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the growth rank is above 60. Sometimes market sentiment just extrapolates the past, but sometimes it reflects reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Constellation Brands very positive
ANALYSIS: With an Obermatt Sentiment Rank of 97 (better than 97% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Constellation Brands is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Constellation Brands. Analyst Opinions are at a rank of 89 (better than 89% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. In addition, Analyst Opinions Change has a rank of 89, which means that currently, stock research experts are getting even more optimistic. Obermatt Market Pulse further supports this with a rank of 90, which means that the current professional news and professional social networks are generally positive when discussing this company (more positive news than for 90% of competitors). But there are few stock holdings by institutional investors. The Professional Investors rank is low at 45, which means that currently, professional investors hold less stock in this company than in 55% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 97 (more positive than 97% compared with investment alternatives), Constellation Brands has a reputation among professional investors that is significantly higher than that of its competitors. Not having too many professionals invested in Constellation Brands may be less of an issue, especially if the stock is from a smaller company where professionals typically invest less. It is natural for professional investors to focus on large and extra-large companies, as they provide more safety. Smaller companies attract fewer professionals in the shareholder community. Overall, the signals from the professionals are still quite favorable for investments in Constellation Brands. ...read more
Value Strategy: Constellation Brands Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 35 (worse than 65% compared with alternatives), Constellation Brands shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Constellation Brands. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 65, which means that the stock price compared with what market professionals expect for future profits is lower than for 65% of comparable companies, indicating a good value concerning Constellation Brands's profit levels. But Price-to-Sales is 11 which means that the stock price compared with what market professionals expect for future profits is higher than for 89% of comparable companies, indicating a low value concerning Constellation Brands's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 32 and for dividend yield, which is lower than for 57% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 35, is a hold recommendation based on Constellation Brands's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Constellation Brands is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: Constellation Brands Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 53 (better than 53% compared with alternatives), Constellation Brands shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Constellation Brands. Sales Growth has a rank of 78, which means that, currently, professionals expect the company to grow more than 78% of its competitors. Profit Growth with a rank of 70 is also above average. But Capital Growth has only a rank of 14, and Stock Returns with 43 are also below-average. Stock returns for Constellation Brands have recently been below 57% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 53, is a buy recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for Constellation Brands. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more
Safety Strategy: Constellation Brands Debt Financing Safety below-average
| SAFETY METRICS | October 24, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 30 |
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| REFINANCING | ||||||||
| REFINANCING | 29 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 60 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 42 |
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ANALYSIS: With an Obermatt Safety Rank of 42 (better than 42% compared with alternatives), the company Constellation Brands has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Constellation Brands is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Constellation Brands. Liquidity is at 60, meaning the company generates more profit to service its debt than 60% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 29, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 71% of its competitors. Leverage is also high at a rank of 30, which means that the company has an above-average debt-to-equity ratio. It has more debt than 70% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 42 (worse than 58% compared with alternatives), Constellation Brands has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Constellation Brands Below-Average Financial Performance
| COMBINED PERFORMANCE | October 24, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 35 |
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| GROWTH | ||||||||
| GROWTH | 53 |
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| SAFETY | ||||||||
| SAFETY | 60 |
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| COMBINED | ||||||||
| COMBINED | 33 |
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ANALYSIS: With an Obermatt Combined Rank of 33 (worse than 67% compared with investment alternatives), Constellation Brands (Distillers & Vintners, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Constellation Brands are low in value (priced high) with a consolidated Value Rank of 35 (worse than 65% of alternatives), and are riskily financed (Safety Rank of 42, which means above-average debt burdens) but show above-average growth (Growth Rank of 53). ...read more
RECOMMENDATION: A Combined Rank of 33, is a hold recommendation based on Constellation Brands's financial characteristics. As the company Constellation Brands shows low value with an Obermatt Value Rank of 35 (65% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 53% of comparable companies (Obermatt Growth Rank is 53). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 42 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for Constellation Brands, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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