Constellation Brands Inc. (NYSE:STZ)

Price to earnings (P/E) ratio

The Price to Earnings ratio exhibited variability over the observed periods. It started at 21.71 in 2017, then decreased to 18.84 in 2018 and further dropped significantly to 11.55 in 2019. There is a missing figure for 2020, but in 2021 it increased sharply to 23.14 before data for 2022 is unavailable. This pattern indicates a period of declining valuation relative to earnings up to 2019, followed by a recovery or increased market valuation relative to earnings in 2021.

Price to operating profit (P/OP) ratio

The Price to Operating Profit ratio shows fluctuations but an overall upward trend in the later years. From 13.89 in 2017, it rose to a peak of 19.12 in 2018, then declined to 16.46 in 2019 and further to 13.7 in 2020, suggesting some volatility. However, the ratio recovered to 16.57 in 2021 and increased further to 20.52 in 2022, indicating that the market price grew relative to operating profits in recent periods.

Price to sales (P/S) ratio

The Price to Sales ratio demonstrates moderate fluctuations within the timeframe. Beginning at 4.55 in 2017, it increased to 5.76 in 2018 before decreasing to 4.89 in 2019 and dropping further to 3.54 in 2020. The ratio then rebounded to 5.37 in 2021 and remained relatively stable at 5.42 in 2022. This suggests a dip in relative valuation to sales in the 2019-2020 period, followed by gradual recovery and stabilization.

Price to book value (P/BV) ratio

The Price to Book Value ratio declined from 4.84 in 2017 to 5.43 in 2018, then sank significantly to 3.16 in 2019 and reached its lowest point of 2.43 in 2020. Afterward, it showed a recovery trend, increasing to 3.4 in 2021 and further to 4.08 in 2022. This trajectory indicates a decline in market valuation relative to book value over the first four years, followed by a sustained partial recovery in the last two years.

Share Price

The share price demonstrated a general upward trend over the analyzed periods, beginning at $171.06 in 2017 and increasing to $254.21 by 2022. Notably, there was a peak in 2018 at $228.26, followed by a dip in 2020 to $153.02, which could indicate a temporary market setback or external influence. Subsequently, the price recovered sharply in 2021 to $238.31 and continued rising modestly into 2022.

Earnings Per Share (EPS)

EPS showed significant volatility within the timeframe. From $7.88 in 2017, it increased steadily to a high of $17.96 in 2019, reflecting strong profitability growth. However, a drastic decline appeared in 2020 with an EPS of -$0.06, indicating a loss per share during that period. The value partially rebounded in 2021 with positive earnings of $10.30 but again fell to a negative figure of -$0.21 in 2022. This fluctuation suggests inconsistency in profitability and potential challenges influencing financial performance.

Price-to-Earnings (P/E) Ratio

The P/E ratio decreased from 21.71 in 2017 to a notably low 11.55 in 2019, aligning with the rising EPS during that time and possibly reflecting a market view of undervaluation or robust earnings improvement. The absence of a P/E value in 2020 corresponds to the negative EPS, as the P/E ratio is undefined when earnings are negative. In 2021, the P/E ratio rose sharply to 23.14, indicating that the market valuation increased in relation to earnings despite EPS not returning to previous highs. The lack of data for 2022 could be attributed to the negative EPS that year, preventing calculation of a meaningful P/E ratio.

Overall Financial Trends

The data reveal cyclical fluctuations in profitability and valuation. While the share price generally increased, earnings demonstrated instability with periods of losses in recent years. The P/E ratio movements emphasize market reactions to earnings variations, reflecting changing investor confidence or market conditions. The losses in 2020 and 2022 suggest external or internal challenges impacting profitability, which may warrant further examination to understand underlying causes and implications for future performance.

Share Price Trend

The share price experienced fluctuations over the analyzed period. Beginning at $171.06 in February 2017, it increased significantly to $228.26 by February 2018. Following this peak, the share price slightly declined to $207.48 in February 2019 and dropped more sharply to $153.02 by February 2020. Subsequently, a notable rebound occurred, with the price rising to $238.31 in February 2021 and further increasing to $254.21 in February 2022, reaching the highest value within the observed timeframe.

Operating Profit Per Share (OPPS)

The operating profit per share showed some variability but remained relatively stable overall. It started at $12.32 in February 2017, dipped slightly to $11.94 in February 2018, and then rose to $12.61 in February 2019. A decrease was noted in February 2020 to $11.17, followed by a significant increase to $14.39 in February 2021. However, this improvement was partially reversed in February 2022 when OPPS declined to $12.39.

Price to Operating Profit Ratio (P/OP)

This valuation metric displayed notable fluctuations throughout the period. It stood at 13.89 in February 2017, rose markedly to 19.12 in February 2018, and then declined to 16.46 in February 2019. A further decrease to 13.7 was observed in February 2020, indicating a potential undervaluation relative to operating profit at that point. Subsequently, the ratio increased to 16.57 in February 2021 and surged to 20.52 in February 2022, suggesting that the share price grew faster than the operating profit per share during the latter years, possibly reflecting heightened market expectations or valuation premiums.

Overall Insights

The share price and valuation ratios were volatile over the six-year period, with both metrics showing significant peaks and troughs. Operating profit per share demonstrated relative stability but with notable declines coinciding with periods of reduced share price. The rising P/OP ratio in recent years points to expanding market valuations relative to underlying operating profitability. This trend suggests an increased investor appetite or optimism, despite the operating profit per share not consistently rising in tandem. The data indicates that valuation changes have a strong influence on share price movements, especially in the last two years.

The analysis of the annual financial data reveals distinct trends in the share price, sales per share, and price-to-sales (P/S) ratio over the six-year period ending February 28, 2022.

Share Price

The share price demonstrated notable volatility throughout the period. Starting at $171.06 in 2017, it increased substantially to $228.26 in 2018, representing a strong upward movement. However, the price dipped to $207.48 in 2019 and experienced a further decline to $153.02 in 2020. This downward trend in 2019 and 2020 could indicate market challenges or company-specific issues during that time. The share price then rebounded sharply, reaching $238.31 in 2021 and continuing to rise to $254.21 in 2022, thus surpassing prior highs and indicating renewed investor confidence or improved fundamentals.

Sales per Share

Sales per share showed consistent growth over the period. Starting at $37.64 in 2017, it increased annually to $39.63 in 2018, $42.41 in 2019, $43.27 in 2020, $44.4 in 2021, and further to $46.86 in 2022. This steady upward trajectory suggests ongoing revenue growth on a per-share basis, reflecting either increasing sales volume, price increases, or effective revenue management.

Price-to-Sales (P/S) Ratio

The P/S ratio experienced fluctuations during the period. It increased from 4.55 in 2017 to a peak of 5.76 in 2018, indicating that the market valued the company's sales more highly at that time. The ratio then declined markedly to 4.89 in 2019 and further to 3.54 in 2020, suggesting a reduced market valuation relative to sales, possibly due to the share price decline mentioned earlier. In 2021, the P/S ratio recovered to 5.37 and slightly increased to 5.42 in 2022, aligning with the increased share price and indicating regained investor confidence in sales performance.

In summary, while sales per share steadily improved over the entire period, the share price and P/S ratio experienced more pronounced fluctuations, with significant declines around 2019-2020 followed by a strong recovery in 2021 and 2022. The overall upward trend in sales per share, coupled with the eventual recovery in valuation multiples, suggests the company managed to overcome the earlier challenges and regained market favor by the end of the period.

The financial data over the six-year period reveals distinct trends in the share price, book value per share (BVPS), and the price-to-book value (P/BV) ratio.

Share Price

The share price exhibited notable fluctuations. It increased from $171.06 in 2017 to a peak of $228.26 in 2018, then declined to $207.48 in 2019. A more pronounced drop occurred in 2020, reaching $153.02. Subsequently, the share price rebounded substantially, rising to $238.31 in 2021 and further to $254.21 in 2022. This pattern suggests sensitivity to external factors with a significant rebound in the latter years.

Book Value Per Share (BVPS)

The BVPS steadily increased from $35.38 in 2017 to a high of $70.09 in 2021, showing consistent growth in the company’s net asset value per share. However, in 2022, there was a decline to $62.33, indicating a reduction in net assets or an increase in shares outstanding relative to net equity.

Price-to-Book Value (P/BV) Ratio

The P/BV ratio started at 4.84 in 2017 and rose to 5.43 in 2018, reflecting a premium valuation of the stock relative to its book value per share during that period. The ratio then declined significantly over the next two years, reaching a low of 2.43 in 2020. Following this trough, it increased to 3.40 in 2021 and further to 4.08 in 2022, indicating a restoration of market confidence relative to book value, though still below the earlier peak levels.