Does Constellation Brands (NYSE:STZ) has enough cash to last in November?

STZ
 Stock
  

USD 257.50  0.01  0.0039%   

Constellation Brands is scheduled to announce its earnings tomorrow. As many investors are getting excited about consumer defensive space, it is fair to break down Constellation Brands as an investment option. Let's inspect the possibilities of Constellation Brands maintaining its debt level in November.
Published over a month ago
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Constellation Brands has 10.98 B in debt with debt to equity (D/E) ratio of 0.95, which is OK given its current industry classification. The entity has a current ratio of 1.37, which is typical for the industry and considered as normal. Debt can assist Constellation Brands until it has trouble settling it off, either with new capital or with free cash flow. So, Constellation Brands' shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Constellation Brands sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Constellation to invest in growth at high rates of return. When we think about Constellation Brands' use of debt, we should always consider it together with cash and equity.
Constellation Brands financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Constellation Brands, including all of Constellation Brands's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Constellation Brands assets, the company is considered highly leveraged. Understanding the composition and structure of overall Constellation Brands debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.
Please read more on our technical analysis page.

Understanding Constellation Total Debt

Constellation Brands liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Constellation Brands has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Constellation Brands balance sheet include debt obligations and money owed to different Constellation Brands vendors, workers, and loan providers. Below is the chart of Constellation main long-term debt accounts currently reported on its balance sheet.
You can use Constellation Brands financial leverage analysis tool to get a better grip on understanding its financial position

How important is Constellation Brands's Liquidity

Constellation Brands financial leverage refers to using borrowed capital as a funding source to finance Constellation Brands ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Constellation Brands financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Constellation Brands's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.
It is good to see analyst projects for Constellation Brands, but it might be worth checking our own buy vs. sell analysis

Sale by Daniel McCarthy of 1682 shares of Constellation Brands

Legal trades by Constellation Brands insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Constellation insider trading alert for sale of class a common stock by Daniel McCarthy, the corporate stakeholder, on 11th of September 2022. This event was filed by Constellation Brands Inc with SEC on 2022-08-04. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Detailed Perspective On Constellation Brands

The firm reported the last year's revenue of 9.16 B. Total Income to common stockholders was 1.26 B with profit before taxes, overhead, and interest of 4.71 B.

Some Constellation technical indicators suggest bounce-back

Current downside variance is at 2.06. Constellation Brands has relatively low volatility with skewness of -0.42 and kurtosis of 0.99. However, we advise all investors to independently investigate Constellation Brands to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Constellation Brands' stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Constellation Brands' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

The Current Takeaway on Constellation Brands Investment

While few other entities under the beverages—wineries & distilleries industry are still a bit expensive, Constellation Brands may offer a potential longer-term growth to investors. While some investors may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Constellation Brands.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Constellation Brands. Please refer to our Terms of Use for any information regarding our disclosure principles.

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