Constellation Brands Inc. (NYSE:STZ)

Market (fair) value of CBI

Over the six-year period, the market value exhibited considerable fluctuations. Starting at approximately 43.16 billion USD in 2017, it increased significantly to 54.30 billion USD in 2018. It remained relatively stable in 2019, slightly declining to 53.99 billion USD, followed by a notable decrease to 43.59 billion USD in 2020. Subsequently, the market value sharply rebounded, reaching 58.69 billion USD in 2021 and marginally increasing to 59.37 billion USD in 2022.

Invested Capital

Invested capital showed a general upward trend from 2017 through 2019, rising from roughly 17.41 billion USD to nearly 24.89 billion USD. In 2020, invested capital decreased to about 21.79 billion USD and continued to decline gradually through 2021 and 2022, ending at approximately 20.49 billion USD.

Market Value Added (MVA)

The MVA metric, representing the difference between market value and invested capital, displayed a strong increase in the earlier years, moving from around 25.75 billion USD in 2017 to a peak of approximately 35.75 billion USD in 2018. This was followed by a decline in 2019 to 29.11 billion USD and a further drop in 2020 to 21.80 billion USD. A robust recovery occurred in 2021 and 2022, with MVA increasing to approximately 37.45 billion USD and 38.88 billion USD, respectively.

Summary of Observed Trends

Market value and MVA trends indicate pronounced volatility, with notable declines in 2020 corresponding with external challenges, likely reflecting broader market impacts. Invested capital peaked in 2019 before gradually reducing, which may suggest strategic decisions affecting capital deployment. The rebound in market value and MVA in the last two years of the dataset points to renewed investor confidence or operational improvements. Overall, despite intermediate setbacks, the company demonstrated recovery and growth in market-related measures toward the end of the observed period.

The financial data over the six-year period reveals dynamic shifts in market value added (MVA), invested capital, and the MVA spread ratio. These indicators together provide insights into the company’s value creation and efficiency in using capital.

Market Value Added (MVA)

The MVA exhibits noticeable fluctuations. Starting at approximately $25.75 billion in 2017, it increased significantly to a peak of around $35.75 billion in 2018. This was followed by a decline to about $29.11 billion in 2019 and a further decrease to approximately $21.80 billion in 2020. Subsequently, there was a strong rebound with MVA rising to nearly $37.45 billion in 2021 and slightly increasing again to about $38.88 billion by 2022. Overall, the trend indicates volatility with a trough in 2020 and recovery thereafter.

Invested Capital

The invested capital shows a rising trend from around $17.41 billion in 2017 to a peak near $24.89 billion in 2019, indicating increased capital deployment during this period. Following 2019, invested capital decreased to approximately $21.79 billion in 2020 and continued to decline modestly to about $21.24 billion in 2021 and $20.49 billion in 2022. This downward shift after 2019 suggests a reduction in capital investment or possible divestitures.

MVA Spread Ratio

The MVA spread ratio, which relates MVA to invested capital, began at 147.87% in 2017 and improved significantly to 192.72% in 2018. It then decreased to 116.95% in 2019 and further declined sharply to around 100.02% in 2020, reflecting diminished value creation relative to capital employed. Following this nadir, the ratio recovered markedly to 176.32% in 2021 and further to 189.72% in 2022, indicating renewed efficiency and enhanced value generation.

In summary, the data indicates that the company experienced a period of strong value creation up to 2018, followed by a challenge period with declines in both market value added and capital utilization efficiency through 2020. Subsequent years demonstrated resilience with recovery in MVA and improved capital efficiency. The reduction in invested capital after 2019, alongside the rebound in value metrics, might suggest a strategic shift toward optimizing capital deployment to enhance shareholder value.

Market Value Added (MVA)

The Market Value Added demonstrated considerable fluctuations over the analyzed periods. It increased substantially from approximately $25.7 billion in February 2017 to a peak of around $35.8 billion in February 2018. Subsequently, there was a notable decline to about $21.8 billion by February 2020. However, from this low point, it rebounded strongly, reaching approximately $37.4 billion in February 2021 and further increasing slightly to about $38.9 billion in February 2022. This pattern suggests periods of volatility with significant recovery and growth post-2020.

Adjusted Net Sales

Adjusted Net Sales exhibited a consistent upward trend throughout the timeframe. The figures rose steadily from roughly $7.33 billion in February 2017 to approximately $8.94 billion by February 2022. This gradual increase indicates ongoing growth in sales revenue, reflecting positive business performance and market demand during these years.

MVA Margin

The MVA margin, expressed as a percentage, showed a pattern broadly consistent with the fluctuations seen in the Market Value Added. It started at 351.22% in February 2017, surged to its highest level of 471.33% in February 2018, then declined significantly to 261.23% by February 2020. Thereafter, it recovered to maintain levels above 430% in both 2021 and 2022, closely mirroring the recovery in MVA. This ratio's variability highlights sensitivity to market value changes relative to sales, with notable dips and recoveries corresponding to broader value trends.