Constellation Brands (STZ)
Consumo básico / Bebidas alcohólicas
A leading premium beer importer and producer (Modelo, Corona, Pacífico) with a genuine moat in its exclusive, perpetual U.S. license, trading near its 52-week low following the wine and spirits divestitures and a CEO transition — the market is punishing the entire business for the part it already sold.
- Price
- $134.45
- Intrinsic value (5y, base)
- $265
- Total annual return (5y)
- 17.2%
- Status (nominal)
- Very undervalued
- Margin of safety
- +42%
The essentials
- The beer segment (91% of revenue) maintains the dollar-share leadership of the entire U.S. category, with Modelo Especial as the #1 brand.
- The 2025 wine divestitures (US$845.9M + US$409.2M for SVEDKA) explain the reported 10.5% revenue decline in FY2026, not organic deterioration of the remaining business.
- FY2027 guidance points to comparable EPS of US$11.20-11.90, with operating margin expanding to 32-33% and a comparable tax rate of ~20%.
- The stock trades at $134, near the floor of its 52-week range (US$127.65-173.22), following the CEO transition and the noise from the wine restructuring.
Intrinsic value — two valuation methods
Total return at 5 years: 17.1%/year = 14.5% appreciation + 2.6% dividend. The target price ($265) is ex-dividend; the $23 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $246 · Multiples $232) exceeds the market price ($134).
Pillars of the analysis
The verdict — today vs 5 years
Today — with margin of safety: at $134 trades ~42.1% below its value discounted to today (~$232) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.
At 5 years — Muy infravalorado: the target price ($265) plus dividends yield above the required average return (10%) — the business compounds.
The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.
Thesis
The business
A two-speed business: an excellent beer franchise (contractual moat, brand leadership, sustained growth) and wine and spirits in full restructuring after two years of divestitures and impairments. The consolidated business today is 91% beer, so the quality of the dominant segment is what defines the business.
The valuation
Valued on P/E over comparable net income — the correct method for a branded consumer goods business without a separate financial piece. At 13× on terminal earnings, the five-year value is $265, implying a +17% against the price of $134.
The margin of safety
There is a margin of safety: the market's perception is meaningfully worse than reality. The verdict is Very undervalued: the market is discounting the wine restructuring as if it were a problem for the entire business, when it is a problem for one-eighth of revenue that has already been resolved.
What to watch
The disconfirmer of the thesis is beer volume continuing to fall (depletions -2.1% in FY2026) without price offsetting it, or the CEO transition being poorly executed and eroding the relationship with distributors at a sensitive moment for the category.
Educational / informational. Does not constitute investment advice.