Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Economic Profit
Constellation Brands Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes shows an overall fluctuating pattern across the years. Initially, there is a steady increase from approximately 1.89 billion to about 4.19 billion between 2017 and 2019. This is followed by a significant decline in 2020, where the value becomes negative, indicating a loss. In the subsequent years of 2021 and 2022, the NOPAT recovers partially, moving back into positive territory but remaining below the peak observed in 2019.
- Cost of Capital
- The cost of capital exhibits a relatively stable pattern, with values fluctuating mildly between 12.04% and 13.76% over the period. After a peak at approximately 13.6% in 2018, it trends downward to its lowest point in 2020 before increasing again to around 13.8% by 2022, indicating a slight rise in the required return rates toward the end of the observed period.
- Invested Capital
- Invested capital shows growth initially, increasing from about 17.4 billion in 2017 to nearly 24.9 billion in 2019. However, from 2019 onwards, there is a declining trend back to approximately 20.5 billion by 2022. This suggests a strategic reduction or divestment in capital employed after the peak in 2019.
- Economic Profit
- Economic profit mirrors the volatility seen in NOPAT but with more pronounced negative outcomes in certain years. The company experienced negative economic profit in 2017 and 2018, followed by a positive peak in 2019, which aligns with the highest NOPAT. In 2020 and 2022, the economic profit is significantly negative, indicating that the company's returns were substantially below its cost of capital during these years. The slight improvement in 2021, though still negative, shows an attempt at recovering value but remains a concern.
- Summary of Trends
- Overall, the data reflects a period of growth and increased profitability up to 2019, followed by substantial challenges starting in 2020, likely corresponding to extraordinary conditions impacting profitability and capital investment. The cost of capital remains relatively stable but trends slightly upward toward the end of the period, which may put additional pressure on achieving economic profit. The decline in invested capital since 2019 could reflect restructuring or attempts to optimize capital deployment in response to the negative returns experienced during the downturn. The volatility in economic profit suggests challenges in generating returns above the company’s cost of capital, particularly in the most recent years.
Net Operating Profit after Taxes (NOPAT)
Constellation Brands Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to CBI.
4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss) attributable to CBI.
- Net Income (Loss) Attributable to CBI
- The net income attributable to the company showed a significant upward trend from 2017 to 2019, increasing from approximately 1.54 billion USD to nearly 3.44 billion USD. This represents a robust growth phase over these three years. However, there was a sharp reversal in 2020, with the company reporting a net loss of about 11.8 million USD. Following this loss, the company returned to profitability in 2021 with nearly 2 billion USD in net income. Yet in 2022, the net income again declined into negative territory, recording a loss of approximately 40.4 million USD. Overall, the data reflects considerable volatility in net income performance, especially post-2019, indicating potential challenges during and after the 2020 period.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrated growth from 2017 through 2019, climbing from roughly 1.89 billion USD to over 4.18 billion USD, nearly doubling during this period. This aligns with the increase in net income, indicating strong operational profitability. However, in 2020, NOPAT sharply declined into a significant negative value of approximately 778 million USD, suggesting operational difficulties or extraordinary charges impacting earnings. A recovery occurred in 2021, with NOPAT rising to about 2.69 billion USD, though this was substantially below the 2019 peak. The 2022 figure decreased again to around 498 million USD, highlighting ongoing instability in operating performance after 2019.
- Overall Financial Trends
- Both net income and net operating profit after taxes exhibited strong growth trends over the initial three-year period, reflecting an expanding and profitable operational phase. The year 2020 marked a critical inflection point, with both metrics showing significant downturns, possibly linked to external disruptions or internal challenges. Although there was a partial rebound in 2021, the company did not regain the peak levels seen in 2019. The subsequent decline in 2022 suggests persistent difficulties in returning to prior performance levels. The volatility captured in these key profitability measures indicates that while the company experienced robust growth earlier, it faced substantial headwinds beginning in 2020, which have had a lasting impact on financial performance.
Cash Operating Taxes
Constellation Brands Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
- Income Tax Provision (Benefit)
- The income tax provision fluctuates significantly over the periods analyzed. In the year ending February 28, 2017, the provision was substantially high at 554,200 thousand US dollars. This value sharply decreased to 11,900 thousand US dollars in the following year, indicating a substantial reduction in tax expense or a change in tax strategy. In the year ending February 28, 2019, the provision rose again markedly to 685,900 thousand US dollars, reflecting a possible increase in taxable income or changes in tax regulations.
- Notably, in the year ending February 29, 2020, there is a negative provision of -966,600 thousand US dollars, suggesting a significant tax benefit or perhaps a reversal of previous tax liabilities. Following this, the provision returned to positive figures in the subsequent years, with 511,100 thousand US dollars in 2021 and a decline to 309,400 thousand US dollars in 2022. The fluctuation highlights varying tax impacts on earnings, potentially influenced by operational performance, tax planning, or extraordinary items during these periods.
- Cash Operating Taxes
- Cash operating taxes exhibit a general declining trend from 2017 through 2021. Starting at 547,177 thousand US dollars in the year ending February 28, 2017, the cash taxes increased slightly to 553,637 thousand US dollars in 2018, indicating stable or increased tax payments at a cash level. From 2019 onward, a steady decrease is observed with payments dropping to 339,562 thousand US dollars, then continuing to 281,244 thousand US dollars in 2020, and further down to 259,325 thousand US dollars in 2021, which may reflect decreased taxable income or improved tax efficiency.
- In the year ending February 28, 2022, there is an increase in cash taxes paid to 302,832 thousand US dollars, suggesting a rebound or change in tax obligations compared to the previous declining trend. This may be indicative of increased earnings or alterations in tax policies impacting the cash tax outflows. Overall, cash operating taxes show more stability and less volatility compared to the income tax provision figures.
Invested Capital
Constellation Brands Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to total CBI stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progres.
- Total reported debt & leases
- Over the six-year period, total reported debt and leases exhibited substantial fluctuations. From 2017 to 2019, there was a notable increase, rising from approximately 9.63 billion to 14.07 billion USD. This peak was followed by a reduction in 2020 to around 12.75 billion USD, then a further decline in the subsequent years, reaching approximately 10.95 billion USD by 2022. The initial growth phase indicates a possible expansion or increased leverage, while the later decrease may suggest debt repayments or restructuring efforts.
- Total CBI stockholders’ equity
- Stockholders’ equity demonstrated a generally upward trajectory from 2017 through 2021. Beginning at roughly 6.89 billion USD in 2017, equity increased steadily, reaching a peak of about 13.60 billion USD in 2021. However, in 2022, there was a decline to approximately 11.73 billion USD. This trend suggests an overall strengthening of the equity base over most of the period, with a partial reversal in the most recent year, which could reflect asset revaluations, dividend payments, or other equity-affecting transactions.
- Invested capital
- Invested capital rose significantly from 2017 to 2019, increasing from roughly 17.41 billion USD to 24.89 billion USD. Subsequently, there was a decline in 2020 to approximately 21.79 billion USD, followed by further decreases to about 21.24 billion USD in 2021 and 20.49 billion USD in 2022. This pattern indicates an initial phase of capital expansion, possibly linked to investments or acquisitions, followed by a contraction phase, which may reflect divestitures, asset impairments, or reduced capital expenditures.
Cost of Capital
Constellation Brands Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total borrowings3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-02-28).
1 US$ in thousands
2 Equity. See details »
3 Total borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total borrowings3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-02-28).
1 US$ in thousands
2 Equity. See details »
3 Total borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total borrowings3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-02-29).
1 US$ in thousands
2 Equity. See details »
3 Total borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total borrowings3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-02-28).
1 US$ in thousands
2 Equity. See details »
3 Total borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total borrowings3 | ÷ | = | × | × (1 – 32.70%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 32.70%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-02-28).
1 US$ in thousands
2 Equity. See details »
3 Total borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total borrowings3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-02-28).
1 US$ in thousands
2 Equity. See details »
3 Total borrowings. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Constellation Brands Inc., economic spread ratio calculation, comparison to benchmarks
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Coca-Cola Co. | |||||||
| Mondelēz International Inc. | |||||||
| PepsiCo Inc. | |||||||
| Philip Morris International Inc. | |||||||
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit Trends
- The economic profit demonstrated considerable volatility over the analyzed period. It started with negative values in 2017 and 2018, with figures of approximately -393.7 million and -383.6 million US dollars respectively. A notable positive peak occurred in 2019 with economic profit reaching nearly 998.1 million US dollars. However, this was followed by a significant decline to a large negative value of about -3.4 billion US dollars in 2020. Subsequently, the economic profit recovered partially but remained negative in 2021 and 2022, with figures of approximately -187.6 million and -2.32 billion US dollars respectively. Overall, the economic profit reflects substantial instability and challenges in maintaining consistent positive returns.
- Invested Capital Development
- The invested capital showed a general upward trend from 2017 through 2019, increasing from around 17.4 billion US dollars to nearly 24.9 billion US dollars. Following this peak in 2019, invested capital declined in the subsequent years, settling at approximately 21.8 billion in 2020, 21.2 billion in 2021, and 20.5 billion US dollars in 2022. This pattern suggests an expansion phase up to 2019 followed by a contraction or divestment phase through 2022.
- Economic Spread Ratio Dynamics
- The economic spread ratio, expressed as a percentage, exhibited a pattern consistent with the economic profit trends. It was negative in 2017 and 2018, with values around -2.26% and -2.07% respectively, indicating returns below the cost of capital. In 2019, this ratio improved significantly to a positive 4.01%, reflecting the period of positive economic profit. In 2020, a sharp decline occurred, with the spread ratio dropping to -15.61%, signaling a substantial erosion in economic value. The ratio improved marginally in 2021 to -0.88% but deteriorated again to -11.33% in 2022. This suggests fluctuations in profitability relative to invested capital cost, with notable downturns in the latter years.
- Summary Insights
- The company experienced significant fluctuations in economic profitability over the analyzed years, with a peak in 2019 followed by marked declines. Invested capital grew until 2019 but decreased thereafter, possibly reflecting strategic shifts or market conditions. The economic spread ratio's volatility highlights challenges in generating returns exceeding the cost of capital, with pronounced negative outcomes during 2020 and 2022. These patterns indicate periods of both operational success and considerable financial stress.
Economic Profit Margin
Constellation Brands Inc., economic profit margin calculation, comparison to benchmarks
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Coca-Cola Co. | |||||||
| Mondelēz International Inc. | |||||||
| PepsiCo Inc. | |||||||
| Philip Morris International Inc. | |||||||
Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit displayed notable variability throughout the observed periods. Initially, the company experienced negative economic profit values, starting at approximately -393,677 thousand US dollars in 2017 and slightly improving to -383,639 thousand US dollars in 2018. In 2019, a significant positive turnaround occurred, with economic profit rising sharply to approximately 998,070 thousand US dollars. However, this positive momentum reversed dramatically in 2020, with economic profit plunging to -3,401,102 thousand US dollars. The subsequent years of 2021 and 2022 also reflected negative economic profit, amounting to -187,596 and -2,321,205 thousand US dollars, respectively. Overall, the economic profit trend highlights substantial fluctuations, with only one year showing a markedly positive economic profit amid generally negative outcomes.
- Adjusted Net Sales
- Adjusted net sales showed a consistent upward trajectory throughout the six-year period. Starting at 7,331,500 thousand US dollars in 2017, sales increased steadily each year, reaching 8,939,000 thousand US dollars in 2022. This reflects overall growth in sales volume or pricing, with annual increments ranging from moderate to strong. The sales growth trend remained uninterrupted even during periods where economic profit experienced significant declines, indicating resilience in revenue generation despite profitability challenges.
- Economic Profit Margin
- The economic profit margin mirrored the economic profit fluctuations, displaying varying performance over time. It started at -5.37% in 2017 and improved slightly to -5.06% in 2018. A pronounced increase occurred in 2019, where the margin turned positive and rose to 12.3%, signaling improved operational efficiency or profitability. In 2020, however, the margin dropped sharply to -40.76%, signaling a severe detriment to economic value creation. The following years showed some recovery but remained negative, with margins at -2.18% in 2021 and deteriorating again to -25.97% in 2022. This pattern underscores the company's challenges in maintaining consistent economic profitability despite steady sales growth.