Gold bars to be exempt from tariffs, White House clarifies
On Friday, Evercore ISI made adjustments to its financial outlook for Constellation Brands (NYSE:STZ), a prominent beverage company traded on the NYSE under the ticker NYSE:STZ. The firm lowered its price target from the previous $310.00 to $300.00 but kept its Outperform rating intact for the stock.
The revision in the price target is based on a blended earnings multiple of approximately 20.0 times the projected earnings per share (EPS) for the calendar year 2025. This valuation considers a higher multiple of around 21.5 times for Constellation Brands' Beer division, which accounts for more than 85% of the company's forecasted fiscal 2024 earnings before interest and taxes (EBIT), and a multiple of about 12.0 times for the Wine & Spirits division.
Additionally, Evercore ISI highlighted that Constellation Brands' actual cash tax rate is estimated to be 600 to 800 basis points below the rate reported in its financial books. This discrepancy could translate to an increase of approximately $1.05 to $1.40 per share in EPS when calculated at the cash tax rate.
The firm also noted potential short-term headwinds for Constellation Brands' share value due to concerns surrounding the upcoming U.S. presidential election and the possibility of Donald Trump's re-election. Despite these concerns, the analyst pointed out that the company had previously shown strong performance during Trump's first term in office despite similar challenges.
In other recent news, Constellation Brands has reported robust growth in its beer segment, despite facing challenges in the wine and spirits sector. The company's Q2 Fiscal Year 2025 results highlighted a near 6% increase in net sales and a 13% growth in operating income in the beer business. However, the wine and spirits segment saw a decrease in shipments and net sales.
Goldman Sachs reiterated its Buy rating for Constellation Brands, maintaining a steady price target of $300. The firm adjusted its earnings per share (EPS) estimates for fiscal years 2025 and 2026 slightly downwards, but still within the high end of Constellation Brands' projected ranges. Goldman Sachs expressed a positive outlook on the company's long-term growth, despite potential macroeconomic pressures.
The company has also outperformed the beer category during the 4th of July holiday, continuing its 58-quarter streak of beer depletions growth. Constellation Brands is increasing its marketing investments, particularly for key beer brands during the football season.
InvestingPro Insights
To complement Evercore ISI's analysis, recent data from InvestingPro offers additional insights into Constellation Brands' financial position. The company's market capitalization stands at $44.43 billion, reflecting its significant presence in the beverage industry. Constellation Brands has demonstrated consistent profitability, with InvestingPro Tips highlighting that the company has been profitable over the last twelve months and is expected to remain so this year, according to analyst predictions.
In line with Evercore ISI's valuation considerations, InvestingPro data shows a P/E ratio of 80.98, which adjusts to 18.04 for the last twelve months as of Q1 2025. This adjusted figure aligns more closely with the multiple used in Evercore's price target calculation. Additionally, Constellation Brands' revenue for the same period was $10.11 billion, with a healthy gross profit margin of 51.12%.
An InvestingPro Tip worth noting is that Constellation Brands has raised its dividend for 10 consecutive years, underscoring the company's commitment to shareholder returns. This consistent dividend growth, coupled with a current dividend yield of 1.66%, may appeal to income-focused investors despite the potential short-term headwinds mentioned in the analysis.
For readers interested in a more comprehensive analysis, InvestingPro offers 5 additional tips and a wide array of financial metrics for Constellation Brands, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.