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Each week we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: Constellation Brands, Inc. (STZ).
 

Profile

Constellation Brands is one of the largest beer, wine, and spirits companies in the United States, with strong brand power across labels such as Corona, Modelo, and Robert Mondavi. The company benefits from consistent consumer demand and premium pricing across its portfolio. While growth in beer remains robust, Constellation continues to navigate margin pressures, high debt levels, and capital allocation between shareholder returns and reinvestment.
 

DCF Analysis

Inputs
Discount Rate: 10%
Terminal Growth Rate: 3%
WACC: 10%

Forecasted Free Cash Flows (in billions)

2025: $2.1 → PV: $1.91
2026: $2.2 → PV: $1.82
2027: $2.3 → PV: $1.74
2028: $2.4 → PV: $1.66
2029: $2.5 → PV: $1.59

Total Present Value of FCFs: $8.72B

Terminal Value Calculation

Using the perpetuity growth model:
TV = (2.5 × 1.03) / (0.10 − 0.03) = $36.79B
Present Value of Terminal Value = $23.43B

Enterprise Value

Enterprise Value = 8.72B + 23.43B = $32.15B

Net Debt

Cash: $0.07B
Total Debt: $12.11B
Net Debt: $12.04B

Equity Value & Per-Share Value

Equity Value = 32.15B − 12.04B = $20.11B
Shares Outstanding: ~178M
Intrinsic Value per Share = 20.11 ÷ 0.178 ≈ $113.00
 

Conclusion

DCF Value: $113.00
Current Price: $133.04
Margin of Safety: –15%

Constellation Brands continues to generate strong free cash flow from its beer business and maintains a valuable portfolio of premium brands. However, the balance sheet shows significant debt, which weighs on equity value in a discounted cash flow analysis. At the current market price, STZ trades above our conservative intrinsic value estimate, suggesting limited upside based on this model.

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