Analyzing Constellation Brands (STZ) and AmBev (ABEV)

Constellation Brands (NYSE: STZ) and AmBev (NYSE:ABEV) are both large-cap consumer staples companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares Constellation Brands and AmBev’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Constellation Brands 27.85% 22.28% 8.86%
AmBev 16.15% 24.66% 14.40%

Institutional and Insider Ownership

72.5% of Constellation Brands shares are held by institutional investors. Comparatively, 6.9% of AmBev shares are held by institutional investors. 15.6% of Constellation Brands shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Constellation Brands and AmBev’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Constellation Brands $8.33 billion 5.00 $2.32 billion $8.72 24.96
AmBev $15.01 billion 5.75 $2.30 billion $0.23 23.91

Constellation Brands has higher earnings, but lower revenue than AmBev. AmBev is trading at a lower price-to-earnings ratio than Constellation Brands, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Constellation Brands and AmBev, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Constellation Brands 0 6 15 0 2.71
AmBev 0 2 3 0 2.60

Constellation Brands presently has a consensus target price of $246.00, indicating a potential upside of 13.04%. AmBev has a consensus target price of $7.50, indicating a potential upside of 36.36%. Given AmBev’s higher possible upside, analysts clearly believe AmBev is more favorable than Constellation Brands.

Dividends

Constellation Brands pays an annual dividend of $2.96 per share and has a dividend yield of 1.4%. AmBev pays an annual dividend of $0.15 per share and has a dividend yield of 2.7%. Constellation Brands pays out 33.9% of its earnings in the form of a dividend. AmBev pays out 65.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Constellation Brands has increased its dividend for 2 consecutive years.

Volatility & Risk

Constellation Brands has a beta of 0.09, meaning that its stock price is 91% less volatile than the S&P 500. Comparatively, AmBev has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Summary

Constellation Brands beats AmBev on 10 of the 17 factors compared between the two stocks.

About Constellation Brands

Constellation Brands, Inc., together with its subsidiaries, produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company sells wine across various categories, including table wine, sparkling wine, and dessert wine. It offers beer primarily under the Corona Extra, Corona Light, Modelo Especial, Modelo Negra, and Pacifico brands; wine under the Black Box, Clos du Bois, Estancia, Franciscan Estate, Inniskillin, Kim Crawford, Mark West, Meiomi, Mount Veeder, Nobilo, Robert Mondavi, Ruffino, Saved, Simi, The Dreaming Tree, The Prisoner, Charles Smith, and Wild Horse brands; and sprits under the SVEDKA vodka, Black Velvet Canadian whisky, Casa Noble tequila, High West craft whisky brands. The company offers its products to wholesale distributors, retailers, on-premise locations, and government alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.

About AmBev

Ambev S.A., through its subsidiaries, produces, distributes, and sells beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt, and food in the Americas. It operates through Latin America North, Latin America South, and Canada segments. The company offers beer primarily under the Skol, Brahma, Antarctic, Brahva, Brahva Gold, Extra, Budweiser, Bud Light, Stella Artois, Corona, Modelo Especial, Beck, Leffe, Hoegaarden, Presidente, Brahma Light, President Light, Bohemia, The One, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Báltica, Ouro Fino, Pilsen, Patricia, Labatt Blue, Alexander Keith's, Kokanee, Banks, and Deputy brands. It also provides CSD, bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Lipton Iced Tea, Fusion, Do Bem, Pepsi, Canada Dry, Squirt, Red Rock, Pepsi-Cola, Seven Up, and Frutee brands, as well as cereal bars. Ambev S.A. offers its products through a network of third-party distributors and a direct distribution system. The company was founded in 1885 and is headquartered in São Paulo, Brazil. Ambev S.A. is a subsidiary of Interbrew International B.V.

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