Intrinsic value of Constellation Brands Cl A - STZ

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$180.93

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$180.93

 
Intrinsic value

$121.63

 
Up/down potential

-33%

 
Rating

sell

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of STZ stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 34.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.97
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
Revenue, $m
  7,332
  7,735
  8,157
  8,598
  9,059
  9,542
  10,047
  10,576
  11,130
  11,710
  12,319
  12,956
  13,624
  14,325
  15,059
  15,829
  16,637
  17,484
  18,373
  19,305
  20,284
  21,310
  22,387
  23,518
  24,704
  25,949
  27,256
  28,628
  30,067
  31,579
  33,165
Variable operating expenses, $m
 
  1,418
  1,453
  1,488
  1,526
  1,565
  1,606
  1,648
  1,693
  1,740
  1,789
  1,049
  1,103
  1,160
  1,219
  1,282
  1,347
  1,416
  1,488
  1,563
  1,642
  1,725
  1,813
  1,904
  2,000
  2,101
  2,207
  2,318
  2,434
  2,557
  2,685
Fixed operating expenses, $m
 
  3,728
  3,821
  3,917
  4,015
  4,115
  4,218
  4,323
  4,431
  4,542
  4,656
  4,772
  4,891
  5,014
  5,139
  5,267
  5,399
  5,534
  5,672
  5,814
  5,960
  6,109
  6,261
  6,418
  6,578
  6,743
  6,911
  7,084
  7,261
  7,443
  7,629
Total operating expenses, $m
  4,932
  5,146
  5,274
  5,405
  5,541
  5,680
  5,824
  5,971
  6,124
  6,282
  6,445
  5,821
  5,994
  6,174
  6,358
  6,549
  6,746
  6,950
  7,160
  7,377
  7,602
  7,834
  8,074
  8,322
  8,578
  8,844
  9,118
  9,402
  9,695
  10,000
  10,314
Operating income, $m
  2,399
  2,589
  2,883
  3,193
  3,519
  3,862
  4,223
  4,604
  5,005
  5,428
  5,873
  7,135
  7,630
  8,151
  8,701
  9,280
  9,891
  10,534
  11,213
  11,928
  12,682
  13,476
  14,313
  15,196
  16,126
  17,105
  18,138
  19,226
  20,372
  21,579
  22,851
EBITDA, $m
  2,693
  3,628
  3,936
  4,259
  4,600
  4,959
  5,336
  5,734
  6,153
  6,594
  7,059
  7,549
  8,065
  8,609
  9,182
  9,786
  10,422
  11,093
  11,800
  12,545
  13,330
  14,157
  15,028
  15,947
  16,915
  17,934
  19,008
  20,140
  21,332
  22,587
  23,910
Interest expense (income), $m
  300
  317
  339
  362
  387
  412
  439
  467
  496
  526
  558
  592
  627
  663
  702
  742
  785
  829
  876
  925
  976
  1,030
  1,087
  1,146
  1,208
  1,273
  1,342
  1,414
  1,489
  1,569
  1,652
Earnings before tax, $m
  2,093
  2,272
  2,544
  2,830
  3,132
  3,450
  3,785
  4,138
  4,510
  4,902
  5,315
  6,543
  7,003
  7,488
  7,999
  8,538
  9,106
  9,705
  10,337
  11,003
  11,706
  12,446
  13,227
  14,050
  14,918
  15,832
  16,796
  17,812
  18,882
  20,010
  21,199
Tax expense, $m
  554
  613
  687
  764
  846
  931
  1,022
  1,117
  1,218
  1,324
  1,435
  1,767
  1,891
  2,022
  2,160
  2,305
  2,459
  2,620
  2,791
  2,971
  3,161
  3,360
  3,571
  3,793
  4,028
  4,275
  4,535
  4,809
  5,098
  5,403
  5,724
Net income, $m
  1,535
  1,659
  1,857
  2,066
  2,286
  2,518
  2,763
  3,021
  3,292
  3,578
  3,880
  4,777
  5,112
  5,466
  5,839
  6,233
  6,647
  7,085
  7,546
  8,032
  8,545
  9,086
  9,656
  10,256
  10,890
  11,557
  12,261
  13,003
  13,784
  14,608
  15,475

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  184
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,602
  19,435
  20,495
  21,602
  22,761
  23,974
  25,243
  26,573
  27,965
  29,423
  30,951
  32,553
  34,232
  35,992
  37,837
  39,772
  41,801
  43,930
  46,163
  48,506
  50,964
  53,544
  56,250
  59,090
  62,071
  65,199
  68,483
  71,929
  75,546
  79,343
  83,329
Adjusted assets (=assets-cash), $m
  18,418
  19,435
  20,495
  21,602
  22,761
  23,974
  25,243
  26,573
  27,965
  29,423
  30,951
  32,553
  34,232
  35,992
  37,837
  39,772
  41,801
  43,930
  46,163
  48,506
  50,964
  53,544
  56,250
  59,090
  62,071
  65,199
  68,483
  71,929
  75,546
  79,343
  83,329
Revenue / Adjusted assets
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
  0.398
Average production assets, $m
  7,025
  7,410
  7,814
  8,237
  8,678
  9,141
  9,625
  10,132
  10,663
  11,219
  11,801
  12,412
  13,052
  13,723
  14,427
  15,164
  15,938
  16,750
  17,601
  18,495
  19,432
  20,415
  21,447
  22,530
  23,667
  24,859
  26,111
  27,425
  28,805
  30,252
  31,772
Working capital, $m
  532
  1,972
  2,080
  2,192
  2,310
  2,433
  2,562
  2,697
  2,838
  2,986
  3,141
  3,304
  3,474
  3,653
  3,840
  4,036
  4,242
  4,458
  4,685
  4,923
  5,172
  5,434
  5,709
  5,997
  6,300
  6,617
  6,950
  7,300
  7,667
  8,053
  8,457
Total debt, $m
  9,238
  9,694
  10,357
  11,050
  11,775
  12,535
  13,329
  14,161
  15,033
  15,946
  16,903
  17,905
  18,956
  20,058
  21,213
  22,424
  23,695
  25,027
  26,425
  27,892
  29,431
  31,045
  32,739
  34,517
  36,383
  38,342
  40,397
  42,554
  44,819
  47,196
  49,691
Total liabilities, $m
  11,711
  12,167
  12,830
  13,523
  14,248
  15,008
  15,802
  16,634
  17,506
  18,419
  19,376
  20,378
  21,429
  22,531
  23,686
  24,897
  26,168
  27,500
  28,898
  30,365
  31,904
  33,518
  35,212
  36,990
  38,856
  40,815
  42,870
  45,027
  47,292
  49,669
  52,164
Total equity, $m
  6,891
  7,269
  7,665
  8,079
  8,513
  8,966
  9,441
  9,938
  10,459
  11,004
  11,576
  12,175
  12,803
  13,461
  14,151
  14,875
  15,634
  16,430
  17,265
  18,141
  19,061
  20,025
  21,037
  22,100
  23,215
  24,384
  25,612
  26,901
  28,254
  29,674
  31,165
Total liabilities and equity, $m
  18,602
  19,436
  20,495
  21,602
  22,761
  23,974
  25,243
  26,572
  27,965
  29,423
  30,952
  32,553
  34,232
  35,992
  37,837
  39,772
  41,802
  43,930
  46,163
  48,506
  50,965
  53,543
  56,249
  59,090
  62,071
  65,199
  68,482
  71,928
  75,546
  79,343
  83,329
Debt-to-equity ratio
  1.341
  1.330
  1.350
  1.370
  1.380
  1.400
  1.410
  1.420
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.520
  1.520
  1.530
  1.540
  1.540
  1.550
  1.560
  1.560
  1.570
  1.570
  1.580
  1.580
  1.590
  1.590
  1.590
Adjusted equity ratio
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,535
  1,659
  1,857
  2,066
  2,286
  2,518
  2,763
  3,021
  3,292
  3,578
  3,880
  4,777
  5,112
  5,466
  5,839
  6,233
  6,647
  7,085
  7,546
  8,032
  8,545
  9,086
  9,656
  10,256
  10,890
  11,557
  12,261
  13,003
  13,784
  14,608
  15,475
Depreciation, amort., depletion, $m
  294
  1,039
  1,053
  1,067
  1,081
  1,097
  1,113
  1,130
  1,148
  1,166
  1,185
  414
  435
  457
  481
  505
  531
  558
  587
  616
  648
  681
  715
  751
  789
  829
  870
  914
  960
  1,008
  1,059
Funds from operations, $m
  1,624
  2,698
  2,910
  3,133
  3,368
  3,615
  3,876
  4,150
  4,440
  4,744
  5,066
  5,190
  5,547
  5,923
  6,320
  6,738
  7,179
  7,643
  8,133
  8,649
  9,193
  9,766
  10,371
  11,007
  11,679
  12,386
  13,131
  13,917
  14,744
  15,616
  16,534
Change in working capital, $m
  -72
  103
  108
  112
  118
  123
  129
  135
  141
  148
  155
  163
  170
  179
  187
  196
  206
  216
  227
  238
  249
  262
  275
  288
  303
  317
  333
  350
  367
  385
  405
Cash from operations, $m
  1,696
  2,881
  2,802
  3,020
  3,250
  3,492
  3,747
  4,015
  4,298
  4,596
  4,911
  5,028
  5,377
  5,745
  6,133
  6,542
  6,973
  7,427
  7,906
  8,411
  8,943
  9,504
  10,096
  10,719
  11,376
  12,069
  12,798
  13,567
  14,377
  15,231
  16,130
Maintenance CAPEX, $m
  0
  -234
  -247
  -260
  -275
  -289
  -305
  -321
  -338
  -355
  -374
  -393
  -414
  -435
  -457
  -481
  -505
  -531
  -558
  -587
  -616
  -648
  -681
  -715
  -751
  -789
  -829
  -870
  -914
  -960
  -1,008
New CAPEX, $m
  -907
  -386
  -404
  -422
  -442
  -462
  -484
  -507
  -531
  -556
  -583
  -611
  -640
  -671
  -704
  -738
  -774
  -812
  -851
  -893
  -937
  -983
  -1,032
  -1,083
  -1,136
  -1,193
  -1,252
  -1,314
  -1,379
  -1,448
  -1,520
Cash from investing activities, $m
  -1,462
  -620
  -651
  -682
  -717
  -751
  -789
  -828
  -869
  -911
  -957
  -1,004
  -1,054
  -1,106
  -1,161
  -1,219
  -1,279
  -1,343
  -1,409
  -1,480
  -1,553
  -1,631
  -1,713
  -1,798
  -1,887
  -1,982
  -2,081
  -2,184
  -2,293
  -2,408
  -2,528
Free cash flow, $m
  234
  2,261
  2,151
  2,338
  2,534
  2,740
  2,958
  3,188
  3,430
  3,685
  3,954
  4,024
  4,323
  4,639
  4,972
  5,323
  5,693
  6,084
  6,496
  6,931
  7,390
  7,873
  8,383
  8,921
  9,489
  10,087
  10,718
  11,383
  12,084
  12,823
  13,602
Issuance/(repayment) of debt, $m
  1,191
  640
  663
  693
  725
  759
  795
  832
  872
  913
  957
  1,003
  1,051
  1,102
  1,155
  1,211
  1,270
  1,333
  1,398
  1,467
  1,539
  1,615
  1,694
  1,778
  1,866
  1,958
  2,055
  2,157
  2,264
  2,377
  2,495
Issuance/(repurchase) of shares, $m
  -1,063
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  180
  640
  663
  693
  725
  759
  795
  832
  872
  913
  957
  1,003
  1,051
  1,102
  1,155
  1,211
  1,270
  1,333
  1,398
  1,467
  1,539
  1,615
  1,694
  1,778
  1,866
  1,958
  2,055
  2,157
  2,264
  2,377
  2,495
Total cash flow (excl. dividends), $m
  409
  2,901
  2,814
  3,031
  3,259
  3,500
  3,753
  4,020
  4,301
  4,598
  4,911
  5,026
  5,374
  5,740
  6,127
  6,534
  6,964
  7,417
  7,894
  8,398
  8,928
  9,488
  10,078
  10,699
  11,355
  12,045
  12,773
  13,540
  14,348
  15,200
  16,097
Retained Cash Flow (-), $m
  -331
  -378
  -396
  -414
  -433
  -454
  -475
  -497
  -521
  -545
  -572
  -599
  -628
  -658
  -690
  -724
  -759
  -796
  -835
  -876
  -919
  -965
  -1,012
  -1,062
  -1,115
  -1,170
  -1,228
  -1,289
  -1,353
  -1,420
  -1,491
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,523
  2,418
  2,617
  2,826
  3,046
  3,278
  3,523
  3,781
  4,052
  4,339
  4,427
  4,746
  5,082
  5,437
  5,811
  6,205
  6,621
  7,059
  7,521
  8,009
  8,523
  9,065
  9,637
  10,240
  10,875
  11,545
  12,251
  12,995
  13,780
  14,606
Discount rate, %
 
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
 
  2,323
  2,034
  1,994
  1,933
  1,853
  1,755
  1,642
  1,516
  1,381
  1,240
  1,047
  914
  786
  663
  549
  446
  355
  277
  211
  157
  114
  80
  55
  37
  24
  15
  9
  5
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Constellation Brands, Inc., together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company sells wine across various categories, including table wine, sparkling wine, and dessert wine. Its principal brands comprise Arbor Mist, Black Box, Blackstone, Clos du Bois, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Mount Veeder, Nobilo, Ravenswood, Rex Goliath, Robert Mondavi, Ruffino, Simi, Toasted Head, Wild Horse, Black Velvet Canadian Whisky, and SVEDKA Vodka. The company offers its products to wholesale distributors, retailers, on-premise locations, and government alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.

FINANCIAL RATIOS  of  Constellation Brands Cl A (STZ)

Valuation Ratios
P/E Ratio 22.9
Price to Sales 4.8
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 20.8
Price to Free Cash Flow 44.6
Growth Rates
Sales Growth Rate 12%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.8%
Cap. Spend. - 3 Yr. Gr. Rate 32.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 112%
Total Debt to Equity 134.1%
Interest Coverage 8
Management Effectiveness
Return On Assets 9.9%
Ret/ On Assets - 3 Yr. Avg. 8.4%
Return On Total Capital 10%
Ret/ On T. Cap. - 3 Yr. Avg. 8.1%
Return On Equity 22.8%
Return On Equity - 3 Yr. Avg. 18.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 48.1%
Gross Margin - 3 Yr. Avg. 46%
EBITDA Margin 36.6%
EBITDA Margin - 3 Yr. Avg. 32%
Operating Margin 32.7%
Oper. Margin - 3 Yr. Avg. 28.2%
Pre-Tax Margin 28.5%
Pre-Tax Margin - 3 Yr. Avg. 23.7%
Net Profit Margin 20.9%
Net Profit Margin - 3 Yr. Avg. 17%
Effective Tax Rate 26.5%
Eff/ Tax Rate - 3 Yr. Avg. 28.3%
Payout Ratio 20.5%

STZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the STZ stock intrinsic value calculation we used $7332 million for the last fiscal year's total revenue generated by Constellation Brands Cl A. The default revenue input number comes from 2017 income statement of Constellation Brands Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our STZ stock valuation model: a) initial revenue growth rate of 5.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.6%, whose default value for STZ is calculated based on our internal credit rating of Constellation Brands Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Constellation Brands Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of STZ stock the variable cost ratio is equal to 18.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3637 million in the base year in the intrinsic value calculation for STZ stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Constellation Brands Cl A.

Corporate tax rate of 27% is the nominal tax rate for Constellation Brands Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the STZ stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for STZ are equal to 95.8%.

Life of production assets of 49.5 years is the average useful life of capital assets used in Constellation Brands Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for STZ is equal to 25.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6891 million for Constellation Brands Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 192.572 million for Constellation Brands Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Constellation Brands Cl A at the current share price and the inputted number of shares is $34.8 billion.


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Stock chart of STZ Financial statements of STZ Annual reports of STZ
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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