Intrinsic value of Constellation Brands Cl A - STZ

Previous Close

$215.82

  Intrinsic Value

$116.40

stock screener

  Rating & Target

sell

-46%

Previous close

$215.82

 
Intrinsic value

$116.40

 
Up/down potential

-46%

 
Rating

sell

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 42.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  12.00
  11.30
  10.67
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
Revenue, $m
  8,212
  9,140
  10,115
  11,137
  12,205
  13,320
  14,482
  15,690
  16,948
  18,255
  19,613
  21,025
  22,491
  24,016
  25,602
  27,251
  28,967
  30,753
  32,614
  34,553
  36,575
  38,684
  40,884
  43,182
  45,583
  48,091
  50,713
  53,455
  56,323
  59,325
Variable operating expenses, $m
  4,176
  4,520
  4,882
  5,261
  5,657
  6,070
  6,501
  6,950
  7,416
  7,901
  7,275
  7,798
  8,342
  8,908
  9,496
  10,107
  10,744
  11,407
  12,097
  12,816
  13,566
  14,348
  15,164
  16,017
  16,907
  17,837
  18,810
  19,827
  20,891
  22,004
Fixed operating expenses, $m
  1,405
  1,436
  1,468
  1,500
  1,533
  1,567
  1,601
  1,636
  1,672
  1,709
  1,747
  1,785
  1,825
  1,865
  1,906
  1,948
  1,991
  2,034
  2,079
  2,125
  2,172
  2,219
  2,268
  2,318
  2,369
  2,421
  2,474
  2,529
  2,585
  2,641
Total operating expenses, $m
  5,581
  5,956
  6,350
  6,761
  7,190
  7,637
  8,102
  8,586
  9,088
  9,610
  9,022
  9,583
  10,167
  10,773
  11,402
  12,055
  12,735
  13,441
  14,176
  14,941
  15,738
  16,567
  17,432
  18,335
  19,276
  20,258
  21,284
  22,356
  23,476
  24,645
Operating income, $m
  2,631
  3,184
  3,766
  4,376
  5,015
  5,683
  6,379
  7,104
  7,859
  8,645
  10,592
  11,441
  12,325
  13,244
  14,200
  15,195
  16,232
  17,312
  18,438
  19,612
  20,837
  22,116
  23,452
  24,848
  26,307
  27,832
  29,429
  31,099
  32,848
  34,680
EBITDA, $m
  5,391
  6,128
  6,903
  7,717
  8,568
  9,457
  10,384
  11,349
  12,353
  13,398
  14,485
  15,614
  16,789
  18,011
  19,282
  20,605
  21,982
  23,417
  24,912
  26,471
  28,097
  29,795
  31,567
  33,419
  35,355
  37,378
  39,495
  41,710
  44,028
  46,456
Interest expense (income), $m
  300
  499
  575
  656
  740
  828
  920
  1,017
  1,117
  1,221
  1,330
  1,443
  1,560
  1,682
  1,808
  1,940
  2,077
  2,219
  2,368
  2,522
  2,682
  2,850
  3,024
  3,207
  3,397
  3,595
  3,802
  4,019
  4,245
  4,482
  4,730
Earnings before tax, $m
  2,132
  2,608
  3,110
  3,636
  4,187
  4,763
  5,363
  5,988
  6,638
  7,315
  9,149
  9,881
  10,643
  11,435
  12,260
  13,118
  14,013
  14,945
  15,916
  16,930
  17,987
  19,092
  20,245
  21,451
  22,712
  24,030
  25,410
  26,854
  28,366
  29,950
Tax expense, $m
  576
  704
  840
  982
  1,131
  1,286
  1,448
  1,617
  1,792
  1,975
  2,470
  2,668
  2,874
  3,088
  3,310
  3,542
  3,783
  4,035
  4,297
  4,571
  4,857
  5,155
  5,466
  5,792
  6,132
  6,488
  6,861
  7,251
  7,659
  8,086
Net income, $m
  1,556
  1,904
  2,270
  2,655
  3,057
  3,477
  3,915
  4,371
  4,846
  5,340
  6,679
  7,213
  7,769
  8,348
  8,950
  9,576
  10,229
  10,910
  11,619
  12,359
  13,131
  13,937
  14,779
  15,659
  16,579
  17,542
  18,549
  19,603
  20,707
  21,863

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  20,842
  23,197
  25,673
  28,266
  30,978
  33,807
  36,755
  39,823
  43,015
  46,332
  49,779
  53,362
  57,085
  60,955
  64,979
  69,164
  73,519
  78,054
  82,776
  87,698
  92,829
  98,182
  103,768
  109,600
  115,692
  122,058
  128,713
  135,672
  142,953
  150,572
Adjusted assets (=assets-cash), $m
  20,842
  23,197
  25,673
  28,266
  30,978
  33,807
  36,755
  39,823
  43,015
  46,332
  49,779
  53,362
  57,085
  60,955
  64,979
  69,164
  73,519
  78,054
  82,776
  87,698
  92,829
  98,182
  103,768
  109,600
  115,692
  122,058
  128,713
  135,672
  142,953
  150,572
Revenue / Adjusted assets
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
Average production assets, $m
  16,301
  18,142
  20,078
  22,107
  24,227
  26,440
  28,746
  31,146
  33,641
  36,236
  38,932
  41,734
  44,645
  47,672
  50,819
  54,093
  57,499
  61,045
  64,739
  68,588
  72,601
  76,787
  81,156
  85,717
  90,481
  95,460
  100,665
  106,108
  111,802
  117,761
Working capital, $m
  1,560
  1,737
  1,922
  2,116
  2,319
  2,531
  2,751
  2,981
  3,220
  3,468
  3,726
  3,995
  4,273
  4,563
  4,864
  5,178
  5,504
  5,843
  6,197
  6,565
  6,949
  7,350
  7,768
  8,205
  8,661
  9,137
  9,635
  10,156
  10,701
  11,272
Total debt, $m
  10,657
  12,141
  13,700
  15,334
  17,043
  18,825
  20,682
  22,615
  24,626
  26,716
  28,888
  31,145
  33,490
  35,928
  38,463
  41,100
  43,844
  46,700
  49,676
  52,776
  56,009
  59,381
  62,900
  66,575
  70,412
  74,423
  78,616
  83,000
  87,587
  92,387
Total liabilities, $m
  13,131
  14,614
  16,174
  17,808
  19,516
  21,298
  23,156
  25,089
  27,099
  29,189
  31,361
  33,618
  35,963
  38,402
  40,937
  43,573
  46,317
  49,174
  52,149
  55,250
  58,482
  61,854
  65,374
  69,048
  72,886
  76,896
  81,089
  85,473
  90,060
  94,860
Total equity, $m
  7,712
  8,583
  9,499
  10,459
  11,462
  12,509
  13,599
  14,735
  15,915
  17,143
  18,418
  19,744
  21,121
  22,553
  24,042
  25,591
  27,202
  28,880
  30,627
  32,448
  34,347
  36,327
  38,394
  40,552
  42,806
  45,161
  47,624
  50,199
  52,893
  55,712
Total liabilities and equity, $m
  20,843
  23,197
  25,673
  28,267
  30,978
  33,807
  36,755
  39,824
  43,014
  46,332
  49,779
  53,362
  57,084
  60,955
  64,979
  69,164
  73,519
  78,054
  82,776
  87,698
  92,829
  98,181
  103,768
  109,600
  115,692
  122,057
  128,713
  135,672
  142,953
  150,572
Debt-to-equity ratio
  1.380
  1.410
  1.440
  1.470
  1.490
  1.500
  1.520
  1.530
  1.550
  1.560
  1.570
  1.580
  1.590
  1.590
  1.600
  1.610
  1.610
  1.620
  1.620
  1.630
  1.630
  1.630
  1.640
  1.640
  1.640
  1.650
  1.650
  1.650
  1.660
  1.660
Adjusted equity ratio
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,556
  1,904
  2,270
  2,655
  3,057
  3,477
  3,915
  4,371
  4,846
  5,340
  6,679
  7,213
  7,769
  8,348
  8,950
  9,576
  10,229
  10,910
  11,619
  12,359
  13,131
  13,937
  14,779
  15,659
  16,579
  17,542
  18,549
  19,603
  20,707
  21,863
Depreciation, amort., depletion, $m
  2,760
  2,944
  3,138
  3,340
  3,553
  3,774
  4,004
  4,244
  4,494
  4,753
  3,893
  4,173
  4,465
  4,767
  5,082
  5,409
  5,750
  6,104
  6,474
  6,859
  7,260
  7,679
  8,116
  8,572
  9,048
  9,546
  10,066
  10,611
  11,180
  11,776
Funds from operations, $m
  4,316
  4,848
  5,408
  5,995
  6,609
  7,251
  7,919
  8,615
  9,340
  10,093
  10,572
  11,387
  12,234
  13,115
  14,032
  14,986
  15,979
  17,014
  18,093
  19,217
  20,391
  21,616
  22,895
  24,231
  25,628
  27,088
  28,616
  30,214
  31,887
  33,640
Change in working capital, $m
  167
  176
  185
  194
  203
  212
  221
  230
  239
  248
  258
  268
  279
  290
  301
  313
  326
  339
  354
  368
  384
  401
  418
  437
  456
  477
  498
  521
  545
  570
Cash from operations, $m
  4,149
  4,672
  5,223
  5,801
  6,406
  7,039
  7,698
  8,386
  9,101
  9,845
  10,314
  11,118
  11,955
  12,825
  13,730
  14,672
  15,653
  16,675
  17,739
  18,849
  20,007
  21,215
  22,476
  23,794
  25,171
  26,611
  28,117
  29,693
  31,342
  33,069
Maintenance CAPEX, $m
  -1,455
  -1,630
  -1,814
  -2,008
  -2,211
  -2,423
  -2,644
  -2,875
  -3,115
  -3,364
  -3,624
  -3,893
  -4,173
  -4,465
  -4,767
  -5,082
  -5,409
  -5,750
  -6,104
  -6,474
  -6,859
  -7,260
  -7,679
  -8,116
  -8,572
  -9,048
  -9,546
  -10,066
  -10,611
  -11,180
New CAPEX, $m
  -1,747
  -1,842
  -1,936
  -2,029
  -2,121
  -2,213
  -2,306
  -2,400
  -2,496
  -2,594
  -2,696
  -2,802
  -2,912
  -3,027
  -3,147
  -3,273
  -3,406
  -3,546
  -3,694
  -3,849
  -4,013
  -4,186
  -4,369
  -4,561
  -4,764
  -4,979
  -5,205
  -5,443
  -5,694
  -5,959
Cash from investing activities, $m
  -3,202
  -3,472
  -3,750
  -4,037
  -4,332
  -4,636
  -4,950
  -5,275
  -5,611
  -5,958
  -6,320
  -6,695
  -7,085
  -7,492
  -7,914
  -8,355
  -8,815
  -9,296
  -9,798
  -10,323
  -10,872
  -11,446
  -12,048
  -12,677
  -13,336
  -14,027
  -14,751
  -15,509
  -16,305
  -17,139
Free cash flow, $m
  947
  1,200
  1,473
  1,765
  2,075
  2,403
  2,749
  3,111
  3,491
  3,886
  3,994
  4,423
  4,870
  5,334
  5,816
  6,317
  6,838
  7,379
  7,941
  8,526
  9,135
  9,769
  10,429
  11,117
  11,835
  12,584
  13,367
  14,184
  15,037
  15,930
Issuance/(repayment) of debt, $m
  1,419
  1,484
  1,559
  1,634
  1,708
  1,782
  1,857
  1,933
  2,010
  2,090
  2,172
  2,257
  2,346
  2,438
  2,535
  2,637
  2,744
  2,857
  2,975
  3,101
  3,233
  3,372
  3,519
  3,674
  3,838
  4,011
  4,193
  4,385
  4,587
  4,800
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  1,419
  1,484
  1,559
  1,634
  1,708
  1,782
  1,857
  1,933
  2,010
  2,090
  2,172
  2,257
  2,346
  2,438
  2,535
  2,637
  2,744
  2,857
  2,975
  3,101
  3,233
  3,372
  3,519
  3,674
  3,838
  4,011
  4,193
  4,385
  4,587
  4,800
Total cash flow (excl. dividends), $m
  2,366
  2,684
  3,032
  3,399
  3,783
  4,186
  4,606
  5,044
  5,501
  5,976
  6,166
  6,680
  7,215
  7,772
  8,351
  8,954
  9,581
  10,235
  10,916
  11,627
  12,368
  13,141
  13,948
  14,792
  15,673
  16,595
  17,559
  18,568
  19,624
  20,730
Retained Cash Flow (-), $m
  -821
  -871
  -916
  -960
  -1,003
  -1,047
  -1,091
  -1,135
  -1,181
  -1,227
  -1,276
  -1,326
  -1,378
  -1,432
  -1,489
  -1,549
  -1,611
  -1,678
  -1,747
  -1,821
  -1,899
  -1,980
  -2,067
  -2,158
  -2,254
  -2,355
  -2,462
  -2,575
  -2,694
  -2,819
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
  59
  66
  73
  81
  89
  98
  107
  116
  126
  136
  146
  157
  168
  180
  192
  205
  218
  232
  246
  261
  276
  293
  309
  327
  345
  365
  385
  406
  428
  451
Cash available for distribution, $m
  1,545
  1,812
  2,116
  2,439
  2,780
  3,139
  3,515
  3,909
  4,320
  4,749
  4,890
  5,355
  5,838
  6,340
  6,862
  7,405
  7,970
  8,557
  9,169
  9,806
  10,469
  11,160
  11,881
  12,634
  13,419
  14,240
  15,097
  15,993
  16,930
  17,911
Discount rate, %
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
  1,427
  1,533
  1,627
  1,690
  1,719
  1,716
  1,680
  1,615
  1,525
  1,414
  1,212
  1,089
  959
  828
  700
  580
  470
  372
  288
  218
  160
  115
  80
  54
  36
  23
  14
  8
  5
  3
Current shareholders' claim on cash, %
  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. is an international beverage alcohol company. The Company is a producer and marketer of beer, wine and spirits with operations in the United States, Canada, Mexico, New Zealand and Italy. Its segments include Beer, Wine and Spirits, and Corporate Operations and Other. It is a multi-category supplier (beer, wine and spirits) of beverage alcohol in the United States. It sells a number of brands in the import and craft beer categories, including Corona Extra, Corona Light, Modelo Especial, Ballast Point and others. It is a producer and marketer of wine, and sells a number of wine brands across various categories, including table wine, sparkling wine and dessert wine, and across all price points, such as popular, premium and luxury categories. Some of its wine and spirits brands sold in the United States, which comprise its U.S. Focus Brands (Focus Brands) include Meiomi, Robert Mondavi, Wild Horse and others.

FINANCIAL RATIOS  of  Constellation Brands Cl A (STZ)

Valuation Ratios
P/E Ratio 27.4
Price to Sales 5.7
Price to Book 6.1
Price to Tangible Book
Price to Cash Flow 24.8
Price to Free Cash Flow 53.2
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 12% 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 8.3%, 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 52.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1375 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 5.4% 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 0.8%.

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 198.5%.

Life of production assets of 10 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 19%. 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 199 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 $42.9 billion.

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COMPANY NEWS

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