Constellation Brands Inc. (NYSE:STZ)

The financial data reveals several noteworthy patterns and shifts in Constellation Brands Inc.'s leverage and interest coverage ratios over the analyzed periods.

Debt to Equity Ratio

This ratio exhibits moderate fluctuation throughout the periods. Initially, values remain around 1.1 to 1.3 from mid-2016 to early 2018, followed by a noticeable decline to below 1.0 during most of 2018 and 2019. The ratio remains below 1.0 until early 2020, indicating a lowering of debt relative to equity. However, starting mid-2021, an upward trend re-emerges, culminating in values exceeding 1.4 by late 2022, suggesting a return to higher leverage levels.

Debt to Capital Ratio

The debt to capital measure follows a pattern similar to debt to equity but generally trends slightly downward from 0.55 in 2016 to near 0.43 by early 2021, indicating a gradual reduction in the proportion of debt within total capital structure. Yet, from mid-2021 onward, an increasing tendency is evident, reaching approximately 0.59 by the end of 2022, implying growing reliance on debt financing during this recent period.

Debt to Assets Ratio

This ratio remains relatively stable between approximately 0.4 and 0.5, with periods of incremental decline from 2016 to 2021, suggesting a slight decrease in asset financing through debt. Notably, there is a rise toward the higher end of the spectrum near 0.5 around late 2022, paralleling the uptick seen in other leverage ratios.

Financial Leverage Ratio

The financial leverage metric indicates a declining trend from about 2.6 in 2016 to below 2.0 by early 2021, pointing to a reduction in the extent to which assets are financed by equity. Subsequently, a reversal occurs, with leverage climbing to nearly 3.0 by late 2022, reflecting increased gearing and potentially higher financial risk.

Interest Coverage Ratio

Interest coverage ratios are available only from early 2017 and exhibit strong coverage capability through 2018 and 2019, with peak values exceeding 12 times coverage. During 2020, a sharp decline occurs, turning negative in some quarters, which signals challenges in covering interest expenses from operating income. Recovery begins in late 2020 and continues into 2022, although the ratio remains below prior peak levels, indicating ongoing pressures but improved earnings relative to interest obligations.

Overall, the data reflects a period of deleveraging from 2016 through early 2021, evidenced by lower debt ratios and reduced financial leverage, accompanied by robust interest coverage. Starting mid-2021, leverage metrics indicate renewed increases in debt levels and financial risk, while interest coverage, although recovering, remains subdued compared to historical highs. This suggests a transition phase where the company may be assuming greater debt to finance operations or growth, with corresponding attention needed on maintaining sufficient earnings to meet interest commitments.

The analysis of the financial data reveals several notable trends over the observed periods. Total debt exhibits fluctuating but generally increasing levels from mid-2016 through late 2022. Specifically, debt climbed from approximately $8.3 billion in May 2016 to a peak around $13.6 billion in late 2018 and early 2019, before moderating somewhat but remaining above $10.9 billion by the end of 2022. This indicates a significant variation in financing activities over time with notable debt increases in certain periods.

Total stockholders’ equity also shows marked changes, initially rising from about $6.8 billion in mid-2016 to a considerable high of approximately $13.5 billion by early 2021. Equity levels, however, demonstrate volatility after this peak, declining to below $8.4 billion by November 2022. The equity trend suggests periods of retained earnings growth or additional equity financing followed by contractions, possibly due to losses, dividends paid, or share repurchases.

The debt-to-equity ratio further contextualizes the relationship between these capital components. This ratio begins above 1.2 in 2016, indicating greater reliance on debt relative to equity. It generally decreases to a low near 0.77 in May 2021, reflecting a shift toward greater equity proportion or reduced debt, improving leverage metrics. However, the ratio rises again to approximately 1.45 by the end of 2022, pointing to increased leverage and potentially higher financial risk.

Overall, the data portrays a company managing its capital structure dynamically, with periods of increased leverage interspersed with phases of deleveraging. The substantial fluctuations in equity alongside rising debt levels toward the later periods may suggest strategic financial adjustments in response to market conditions or operational needs. The recent increase in the debt-to-equity ratio warrants attention as it could imply elevated exposure to debt-related financial risks.

Total Debt

General upward movement with peaks around late 2018 and early 2019 exceeding $13 billion, followed by stabilization above $10 billion in recent periods.

Total Stockholders’ Equity

Rises steadily until early 2021 with a peak around $13.6 billion, then declines significantly towards the end of 2022.

Debt to Equity Ratio

Starts above 1.2, decreases to below 0.8 by mid-2021 indicating reduced leverage, and then increases sharply to about 1.45 by late 2022.

The analysis of the financial data reveals several notable trends in the company's debt and capital structure over the examined periods. Total debt shows fluctuations with an overall increase from May 31, 2016, to November 30, 2022. The amount rose from approximately 8.31 billion US dollars in mid-2016 to peaks reaching above 13.5 billion US dollars in late 2018 and remained relatively elevated with some variability thereafter. Noteworthy is a decline in total debt levels after early 2019, followed by some moderate recovery toward the end of the examined timeline.

Total capital exhibited a general upward trend initially, increasing from about 15.16 billion US dollars in May 2016 to a peak around 26.17 billion US dollars in early 2019. After this point, a downward movement became evident, with total capital decreasing to levels near 20.36 billion US dollars by late 2022. This decline after 2019 contrasts with the initial growth phase, indicating a contraction in overall capital during the latter part of the period.

The debt to capital ratio demonstrates variability but generally follows a declining trend from mid-2016 through early 2021, dropping from approximately 0.55 to a low near 0.43. This indicates a gradual reduction in leverage during this timeframe. However, after early 2021, the ratio increases again, reaching around 0.59 by November 2022, suggesting a return to higher leverage levels. The ratio’s fluctuations reflect changing balances between debt and capital, with periods of deleveraging followed by increased debt reliance.

Total Debt

Fluctuated over the analyzed period, peaking in late 2018.

Decreased somewhat after early 2019 but increased again toward the end.

Total Capital

Increased steadily until early 2019, then declined notably through 2022.

Debt to Capital Ratio

Decreased from 0.55 to about 0.43 between 2016 and early 2021, indicating lower leverage.

Increased after 2021, reaching 0.59, pointing to heightened leverage.

Overall, the data suggest a period of strengthening capital positions and reduced leverage in the first half of the timeline, followed by a phase of reduced capital base and increased financial leverage towards the end. These shifts may reflect changes in the company's financing strategy, market conditions, or operational needs. The heightened debt to capital ratio in recent periods indicates a greater reliance on debt financing relative to total capital.

The analysis of the quarterly financial data reveals notable fluctuations and trends in total debt, total assets, and the debt to assets ratio over the period examined.

Total Debt

Total debt shows variability with periods of both increase and decrease. Beginning at approximately 8.31 billion US dollars in May 2016, it initially decreased slightly by August 2016 but then showed intermittent rises and dips over subsequent quarters. Noteworthy is the spike in November 2018, where total debt reached approximately 13.57 billion US dollars, marking a significant increase compared to earlier periods. Following that peak, debt levels generally trended downward until August 2020, then exhibited a gradual decrease before rising again toward the end of the dataset, peaking once more at around 12.17 billion US dollars in November 2022. Overall, the total debt levels have demonstrated significant volatility with periods of both accumulation and reduction.

Total Assets

Total assets exhibited a general upward trend from May 2016 through November 2018, growing from approximately 17.63 billion US dollars to a peak near 27.89 billion US dollars. This rise indicates substantial asset accumulation over this time frame. However, beginning in early 2019, total assets fluctuated and later displayed a declining tendency, dropping to around 24.46 billion US dollars by November 2022. This reduction in assets in the more recent periods may reflect asset sales, depreciation, or other changes in the company’s asset structure.

Debt to Assets Ratio

The debt to assets ratio has fluctuated between roughly 0.39 and 0.5 throughout the periods observed. Initially, ratios hovered near 0.45 to 0.5, suggesting a balanced but moderately leveraged capital structure. The ratio decreased to approximately 0.39 in early 2021, indicating a relatively lower reliance on debt financing during that timeframe. However, towards the latter part of the data, the ratio increased again, reaching around 0.5 by November 2022, implying an elevated leverage position. These variations in the debt to asset ratio reflect changes in both debt levels and asset base, with higher ratios corresponding to increased financial leverage and potentially higher financial risk.

In summary, the data indicates that while the company expanded its assets significantly up to 2018, it accompanied that growth with substantial increases in debt. Following 2018, both total assets and total debt entered phases of decline and volatility. The debt to assets ratio confirms changes in leverage levels, initially reducing then rising toward higher leverage in recent quarters. This pattern suggests active management of capital structure with periods of deleveraging followed by increased borrowing or asset revaluation.

Total assets

The total assets show a generally upward trend from May 2016 through November 2018, increasing from approximately 17.63 billion USD to around 27.89 billion USD. This growth period is followed by a stabilization and slight decline phase starting early 2019 through mid-2022, with assets gradually decreasing to approximately 24.46 billion USD by the end of the period. Notably, a peak is observed in February 2019 before the downward trend commences. The fluctuation suggests asset expansion in earlier years, which moderates and contracts slightly in recent years.

Total CBI stockholders’ equity

Equity levels increased from about 6.85 billion USD in May 2016 to a peak of around 13.31 billion USD in November 2020, indicating a significant strengthening of shareholders' equity over this interval. After reaching this peak, equity values decline consistently through to the end of the period in November 2022, ending at approximately 8.39 billion USD. This trend demonstrates a period of equity growth followed by a period of substantial reduction, potentially reflecting changes in retained earnings, dividends, or market conditions affecting shareholder value.

Financial leverage (ratio)

The financial leverage ratio begins at a relatively high level of 2.57 in May 2016, decreases to near 1.99 by February 2021, and then rises sharply again to reach 2.92 by November 2022. The initial decline suggests a de-leveraging phase where equity growth might have outpaced debt or total assets, reducing reliance on debt financing. However, the subsequent increase in leverage ratio towards the end of the period indicates increased use of debt relative to equity, which could reflect strategic financing decisions or shifts in capital structure.

The earnings before interest and tax (EBIT) demonstrate notable volatility over the observed periods. Initially, there is a general upward trajectory from May 2016 through early 2018, with EBIT rising from 553,400 thousand USD to a peak of 1,453,400 thousand USD in August 2018. However, a sharp decline follows, culminating in significant negative EBIT values starting May 2019, reaching the lowest point of -914,000 thousand USD in November 2022. This period reflects substantial operational challenges or extraordinary charges adversely affecting earnings.

Interest expense remains relatively stable throughout the timeline, fluctuating within a narrow range from approximately 72,800 to 114,600 thousand USD. No drastic increases or decreases are apparent, suggesting consistent borrowing costs or stable debt levels during the periods analyzed.

The interest coverage ratio exhibits considerable variation aligned with EBIT fluctuations. It peaks in November 2018 at 12.29, indicating strong ability to meet interest obligations, followed by a rapid decline to negative values (-1.2 in February 2020 and -0.43 in May 2020), reflecting periods where EBIT was insufficient to cover interest expenses. A recovery phase begins mid-2020, with the ratio gradually improving but remains volatile through late 2022, signaling ongoing instability in earnings relative to interest burden.

Overall, the data reveals a period of growth leading to a peak in operational profitability, succeeded by significant downturns impacting the company’s ability to cover interest costs reliably. Interest expenses remain stable, highlighting that the financial strain stems mainly from earnings performance rather than financing costs. The fluctuating interest coverage ratio underscores the importance of monitoring operational efficiency and financial risk management moving forward.

EBIT Trend

Growth until mid-2018, sharp decline thereafter, with notable negative values from mid-2019 onward.

Interest Expense Trend

Consistent and stable throughout all periods without significant volatility.

Interest Coverage Ratio

Strong coverage up to late 2018, sharp deterioration to negative values around early 2020, followed by partial recovery but continued volatility.