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US21036P1084Beverages - AlcoholicBeverages - Wineries & Distilleries

Last update on 2024-06-07

Constellation Brands (STZ) - Piotroski F-Score Analysis for Year 2023 (Final Score: 3/9)

Analyze Constellation Brands (STZ) using the Piotroski F-Score model for 2023, scoring 3 out of 9. Detailed profitability, liquidity, and efficiency metrics included.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 3

We're running Constellation Brands (STZ) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
0
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score is a measure used to evaluate a company's financial health. It ranges from 0 to 9 based on 9 separate criteria related to profitability, liquidity, and efficiency. Constellation Brands (STZ) was analyzed using this score and ended up with a score of 3 out of 9. While the company showed strong positive cash flow and improved asset turnover, it struggled with profitability, return on assets, leverage, current ratio, and gross margin. This indicates mixed signals about its financial stability.

Insights for Value Investors Seeking Stable Income

Given that Constellation Brands (STZ) has a Piotroski F-Score of 3, it falls in the lower half of the score range. This suggests that the company may currently be facing financial challenges. Investors might want to proceed cautiously or look into other stocks with higher scores and potentially more robust financial health. However, if you are interested in specific aspects like the strong cash flow, you might consider diving deeper before making any investment decisions.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Constellation Brands (STZ)

Company has a positive net income?

Net income is a key indicator of a company’s profitability over a specific period, usually indicating the final earnings after all expenses have been deducted from revenues.

Historical Net Income of Constellation Brands (STZ)

Constellation Brands (STZ) has a negative net income of -$71,000,000 for the year 2023. Looking at the data over the past 20 years, the company has experienced fluctuating net incomes, with significant losses in certain years such as 2008 (-$613,300,000) and 2009 (-$301,400,000). Despite some years of notable profitability, such as 2019 ($3,435,900,000) and 2014 ($1,943,100,000), the negative net income in 2023 indicates a challenging financial period. Consequently, the score for this criterion is 0.

Company has a positive cash flow?

Cash Flow from Operations (CFO) analyzes a company’s cash inflow from regular business activities and is crucial for assessing its liquidity and efficiency.

Historical Operating Cash Flow of Constellation Brands (STZ)

For 2023, Constellation Brands (STZ) reported a CFO of $2,756,900,000, which is positive. Over the past two decades, the company has demonstrated a consistent positive trend in generating operational cash with values increasing from $236,053,000 in 2003 to $2,756,900,000 in 2023. Such positive cash flow signifies robust operational performance and efficient cash management, which is crucial, especially meeting its financial obligations and financing growth. Therefore, STZ adds one point for this criterion, highlighting its strong liquidity position.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) criterion measures profitability relative to total assets. A higher ROA suggests more efficient management and generates higher returns from assets.

Historical change in Return on Assets (ROA) of Constellation Brands (STZ)

In 2023, the ROA for Constellation Brands (STZ) was -0.0028 compared to -0.0015 in 2022, indicating a decline in the company's efficiency in using its assets to generate profit. This negative trend deducts one Piotroski point and signals declining asset productivity, contrasting with the industry’s healthier median ROA of approximately 0.5508%. This places further scrutiny on STZ management’s effectiveness.

Operating Cashflow are higher than Netincome?

The Operating Cash Flow compares the actual cash generated by the company's operations to its net income.

Historical accruals of Constellation Brands (STZ)

In 2023, Constellation Brands (STZ) reported an operating cash flow of $2,756,900,000, significantly higher than its net income of -$71,000,000. This indicates strong cash generation capabilities despite reporting a net loss. Over the past 20 years, the company has shown a positive trend in its operating cash flow, with consistent annual increases. Notably, from $236,053,000 in 2003 to $2,756,900,000 in 2023, operating cash flow has grown more than tenfold. Hence, this criterion scores a 1, suggesting good cash flow health.

Liquidity of Constellation Brands (STZ)

Leverage is declining?

Change in Leverage examines the company's total debt levels. It is critical because high leverage can signal financial distress, whereas lower leverage typically indicates stronger financial health.

Historical leverage of Constellation Brands (STZ)

In 2022, Constellation Brands (STZ) had a leverage ratio of 0.3847, but this increased to 0.4746 in 2023, marking a significant rise. Over the last 20 years, leverage has shown fluctuations, ranging from 0.32 in 2004 to a high of 0.4941 in 2009. The increase in leverage for 2023 indicates a higher debt burden, which may suggest deteriorating financial stability. As such, this increase in leverage does not add a point in the Piotroski score, indicating a negative trend for this financial metric.

Current Ratio is growing?

Change in Current Ratio is a measure of a company's ability to pay off its current liabilities with its current assets. It is important because it indicates the short-term financial health of the company.

Historical Current Ratio of Constellation Brands (STZ)

For Constellation Brands (STZ), the Current Ratio decreased from 1.2338 in 2022 to 1.1778 in 2023. This trend is considered negative as the Current Ratio has declined, indicating a slight decrease in the company's short-term liquidity. Over the last 20 years, the company has often stayed below the industry median, which was 2.0515 in 2023. This denotes that Constellation Brands generally maintains a lower liquidity position relative to its industry peers.

Number of shares not diluted?

Examining the change in shares outstanding is crucial as it reflects a company's approach towards equity financing, dilution, and capital structure.

Historical outstanding shares of Constellation Brands (STZ)

Analyzing Constellation Brands' shares outstanding from 2022 to 2023, we observe an increase from 190,656,000 shares to 192,543,000 shares. This increment suggests that the company may have issued additional shares, possibly for capital raising or stock-based compensation. This trend results in a score of 0 per the Piotroski criterion, as an increase in outstanding shares might indicate dilution, whereas a decrease typically signals a more favorable capital management strategy. Historically, Constellation Brands has fluctuated its shares outstanding over the past 20 years. From a peak of 244,946,000 in 2010, shares outstanding have generally decreased, indicating efforts to buy back stock or reduce equity. Recent trends, however, point towards increased share issuance, prompting closer scrutiny of the company's capital management strategies moving forward.

Operating of Constellation Brands (STZ)

Cross Margin is growing?

The change in Gross Margin criterion evaluates if the company's efficiency has improved in turning revenue into gross profit.

Historical gross margin of Constellation Brands (STZ)

For Constellation Brands (STZ), the Gross Margin decreased from 0.5337 in 2022 to 0.5045 in 2023. This decline signals a reduction in operational efficiency related to cost management, leading to a score of 0 points for this criterion. Historically, Constellation Brands has fluctuated but ultimately shown long-term improvement in Gross Margin, peaking at 0.5337 in 2022. Benchmarking against industry medians, however, Constellation Brands remains below the industry median of 0.5508 for 2023, suggesting a competitive gap that needs addressing.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency in using its assets to generate sales. A higher ratio implies better performance.

Historical asset turnover ratio of Constellation Brands (STZ)

The Asset Turnover for Constellation Brands (STZ) increased from 0.3331 in 2022 to 0.3742 in 2023, showing improved efficiency in asset utilization. Adding 1 point in the Piotroski Score.


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