STZ could have a big month of December
Beverage giant Constellation Brands, Inc. (NYSE: STZ) is down 1.1% to trade at $250.83 today. The company's executive VP and CFO, Garth Hankinson, will participate in the 2022 Morgan Stanley Global Consumer and Retail Conference on Tuesday, December 6. Hankinson will cover the company’s strategic business initiatives, financial metrics, operating performance, and outlook for the future during his presentation at the conference. Ahead of that event next Tuesday, we figured it was time to check in on STZ.
Prior to yesterday's 1.5% loss, STZ was cruising to $260, but per the chart below, this area has been elusive in the past. Heading into the final month of 2022, the shares are holding their year-to-date breakeven level.
Moreover, the business is expected to report 7.8% revenue growth and 7.5% earnings growth for fiscal 2023. Estimates also predict a 6.7% increase in revenue and a 15.3% increase in earnings for fiscal 2024. As a result, the stock provides a rich valuation at a forward price-earnings ratio of 20.16 and a price-sales ratio of 5.12.
Furthermore, the company holds an unfavorable balance sheet with $165.1 million in cash and $10.95 billion in total debt, which could potentially affect its profitability in a negative way over the long-term. Constellation Brands has previously experienced issues on the bottom line, reporting net losses for both fiscal 2022 and fiscal 2020. Overall, STZ poses too many risks for value investors and not enough growth potential to warrant its current valuation.