InvestorsObserver gives Constellation Brands, Inc. Class A (STZ) a weak valuation score of 28 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. STZ currently holds a better value than 28% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.
Metrics Analysis
STZ has a trailing twelve month Price to Earnings (PE) ratio of 18.6 which places it around the histroical average of roughly 15. STZ is currently trading at a average value due to investors paying around what the stock is worth in relation to its earnings. STZ's trailing-12-month earnings per share (EPS) of 12.33 does justify its share price in the market. Trailing PE ratios do not factor in the company's projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far.
STZ currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 3.4. The market is currently overvaluing STZ in relation to its projected growth due to the PEG ratio being above the fair market value of 1. STZ's PEG comes from its forward price to earnings ratio being divided by its growth rate. Because PEG ratios include more fundamentals of a company's overall health with additional focus on the future, they are one of the most used valuation metrics by analysts.
Summary
All together these valuation metrics paint a pretty poor picture for STZ at its current price due to a overvalued PEG ratio due to strong growth. The PE and PEG for STZ are worse than the average of the market resulting in a valuation score of 28.
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