STZ – Market expectations are for Uniform ROA declines, but management is confident about their brands, growth, and market trends

• Constellation Brands, Inc. (STZ:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 14.4x Uniform P/E. At these levels, the market has bearish expectations for the firm, but management is confident about their brands, volume growth, and market trends
  
  

• Specifically, management is confident that Pacifico had double-digit depletion growth, Familiar will be an important product in specific geographical regions, and that they remain bullish on the future of Corona Premier. Moreover, they are confident that they will see continued acceleration in the Refresca franchise, their Wine & Spirits segment outperformed expectations in Q3, and that their volume growth solidifies their position as a leader in the high-end US beer business. Furthermore, they are confident that Canopy established over 35% share in Alberta, which is Canada’s most developed recreational cannabis market, and that Nelson’s Green Brier continues to innovate and leverage its existing success. They are also confident that they benefitted from consumer trade up trends and favorable margin trends, targeted a marketing spend of 9.5%-10% of net sales, and their free cash flow improvement was a result of strong operating cash flow