Morningstar Rating

Stock Research and Analysis

by Adam Fleck, CFA

Bulls Say

Many of Constellation’s beer brands have a long history in Mexico (under Grupo Modelo) and resonate with the Hispanic customer in Mexico. It would be difficult for a competitor duplicate this brand awareness quickly.
There appears to be a high ceiling for U.S. wine consumption growth. The country currently drinks less than half of the amount of wine per capita compared with developed nations such as France, Spain, or Germany.
As one of the world's largest wine producers, Constellation has greater scale than its smaller rivals. Read more 

Bears Say

After the Crown acquisition, Constellation is highly leveraged and is unlikely to return capital to shareholders until leverage comes down (management has stated 4.0 times EBITDA target).
Consumers have demonstrated little brand loyalty in the wine category. Moreover, consumers' inclination to try new types and brands of wine within their preferred category and price range makes it difficult for winemakers to maintain pricing power.
Mainstream beer volumes are declining in the U.S. in favor of wine and spirits. If import growth were to decline, the firm would face margin pressures. Read more 

Management

We believe Constellation Brands has Standard stewardship. Current CEO Robert Sands and former CEO (current chairman of the board) Richard Sands are sons of Constellation founder Marvin Sands. The Sands family controls the majority of the firm’s voting   Read more 

Profile

Constellation Brands is a diversified alcohol company that sells wine, spirits, and beer primarily in the United States. Notable premium wine brands in the firm's portfolio   Read more 

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