Investopedia: Constellation Brands Looks To Keep The Recovery Flowing

Change within a company can be difficult, not to mention risky, but Constellation Brands (NYSE:STZ) hasn't shied away from reconfiguration. Once known only for its wine business, the company has an attractive niche spirits business and has ponied up significant capital to take control of its Crown Imports joint venture. While these shares are up strongly over the past year and alcohol-related stocks are doing well now, investors may want to pause to consider the valuation before bidding these shares up further.

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Investopedia: Rumors About A Diageo-Beam Tie-Up Are Interesting, But Not Too Likely

December is the season for rumors in the financial markets, as there's relatively little actual news for reporters and columnists to discuss. With that in mind, a weekend piece in Britain's Sunday Telegraph regarding a potential merger between Diageo (NYSE:DEO) and Beam (Nasdaq:BEAM) should be taken with more than a few grains of salt.

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Investopedia: Brown-Forman May Struggle To Keep This Premium

When times get tough, investors will hit the bottle. Although sales of beer and spirits aren't quite as invulnerable to economic conditions as some investors like to believe, they are a lower-beta product category. All of that said, and allowing for the good success seen lately in promoting new internally-developed products and boosting margins, it's hard to see how Brown-Forman (NYSE:BF.B) keeps its elevated premium for the long haul.

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Investopedia: Brown-Forman Another Example Of Overpaying For Safety

As has been the case with other names in the spirits business like Diageo (NYSE:DEO) and Beam (NYSE:BEAM), investors seem comfortable overpaying to own the stock of Brown-Forman (NYSE:BF.B). Certainly there is a growth angle to this story, as the company looks to extend its world-leading share in bourbon to new markets like China. That said, even high single-digit free cash flow growth isn't enough to push the fair value estimate to an attractive level.

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 http://stocks.investopedia.com/stock-analysis/2012/Brown-Forman-Another-Example-Of-Overpaying-For-Safety-BF-B-BEAM-DEO-BUD0608.aspx

Investopedia: Premium Spirits Drive A Premium Valuation for Beam

With bad news seemingly rolling in every day about the economic conditions in one part of the world or another, I can understand the flight to quality/consistency that has pushed up some well-known names. But while I understand the appeal of a stock like Beam (NYSE:BEAM), I still don't want to overpay for an asset that is unlikely to bail me out with exceptional growth. So while Beam is certainly a global spirits company worth watching, it will have to pull back a fair bit before the valuation looks truly appealing.

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Investopedia: Can Diageo Keep The Party Going?

Right now is a pretty good time to have a global business with valued brands and pricing power. Recent years have proven that demand for spirits is not as inelastic as once conjectured, but Diageo (NYSE:DEO) has nevertheless been a popular stock in a nervous market. Curiously, even as the investors in 2012 have shown more interest in risky names, Diageo has maintained its momentum. The question for investors is how much room is left in this run.

A Strong Fiscal First Half  
So far, so good when it comes to Diageo's relatively ambitious targets for 2012. Organic revenue grew 7% for the first half and while the quarter-by-quarter performance was a little unbalanced (almost twice as much growth in the first quarter), underlying growth was consistent in both. As was the case for Coca-Cola (NYSE:KO) and PepsiCo (NYSE:PEP), 3% volume growth seems like the magic number this quarter.

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Investopedia: Yet Another Disappointment From Central European Distribution

At some point, a company's travails can no longer be just about a difficult market. Sooner or later, management has to step up, acknowledge mistakes and craft a plan for better results. Although Polish and Russian vodka producer Central European Distribution (Nasdaq:CEDC) still has a lot of inherent value in the business, investors cannot afford to have much confidence in management anymore. Sooner or later, the question has to be asked whether the markets are truly so challenging or whether management simply isn't up to the challenges.

Another Big Miss  
CEDC reported that revenue grew 45% third quarter in 2011 compare to same period in 2010, with 25% value growth in Russia and 7% value growth in Poland. Although volumes were strong in Poland (up 18% compared to third quarther 2010), growth in Russia was just 3% and well below management expectations.

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Investopedia: Constellation Grows By Shrinking

It's not the greatest testament to a business division, when the parent company jettisons it and posts higher profits. Such is the case for Constellation Brands (NYSE:STZ), a company that spent and borrowed too much to expand and is now trying to find a business model that offers better growth and margins for the long haul.

A Fiscal Q2 Better Than Expected 

Constellation's fiscal second quarter results were not great, but they were better than most analysts expected. As-reported revenue plunged 20% (or 21% in constant currency), while organic revenue was basically flat, the difference coming from the divestiture of the Australian and European wine businesses.

Volume was quite mixed. Total North American shipment volume was down almost 2%, as reported, and even worse on an organic basis, which was down almost 4%. Depletion volume, which measures the flow of product from distributors to retailers, was negative in an industry that's showing some modest growth. That said, beer and spirits businesses seem to be doing a fair bit better.

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