Constellation Brands: Executing Well And Gaining Share, With More To Come

My positive thesis on Constellation Brands (NYSE:STZ) back in August of 2021 was predicated on meaningful volume share growth potential for the company’s Modelo and Corona brands, as well as further improvement potential in the wine business, and this has played out well over the last 16 months, with Constellation continuing to gain share in the U.S. market, while the shares have outperformed (up almost 11%) other beer rivals like Molson Coors (TAP) (by 300bp), ABI (BUD) (by about 1,100bp), Heineken (OTCQX:HEINY) (by over 2,300bp), and Carlsberg (OTCPK:CABGY) (by about 2,700bp), as well as the broader consumer staples space.

Constellation is still under-leveraged on national distribution and under-leveraged to on-premises, but management continues to work at both, with evident progress over the last year (and beyond). While trade-down and tougher comps are an emerging risk, and I do see some margin vulnerability in the short term, Constellation still looks undervalued to me and worth a closer look.

 

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Constellation Brands: Executing Well And Gaining Share, With More To Come