Constellation Brands Inc. (NYSE:STZ)

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrates a gradual decline over the analyzed period, decreasing from 1.86 in 2017 to 1.46 in 2022. This trend indicates a diminishing efficiency in generating sales from net fixed assets. The decrease appears steady, with slight fluctuations but a consistent downward direction.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

When considering operating leases and right-of-use assets, the turnover ratio similarly trends downward, starting at 1.86 in 2017 and declining more markedly to 1.35 by 2022. The inclusion of lease-related assets results in a lower turnover ratio particularly from 2020 onwards, reflecting the impact of capitalization of lease assets on asset base and corresponding turnover metrics.

Total Asset Turnover

The total asset turnover ratio shows a noticeable drop from 0.39 in 2017 to 0.28 in 2019, followed by a slight recovery to 0.34 in 2022. This indicates an initial reduction in the effectiveness of total assets in generating sales, with some improvement in recent years, though still below the starting levels. The trend suggests capacity utilization challenges or asset growth outpacing sales growth over time.

Equity Turnover

Equity turnover declines significantly from 1.06 in 2017 to a low of 0.63 in 2021, before rebounding to 0.75 in 2022. This pattern reveals a reduced rate of sales generation relative to shareholder equity for much of the period, with partial recovery in the most recent year. The decline may be associated with either increased equity base or sales contraction, with the later uptick indicating improving efficiency or sales activity in relation to equity.

Net sales

The net sales demonstrated a consistent upward trajectory over the six-year period. Starting at approximately $7.33 billion in 2017, net sales increased each year, reaching around $8.82 billion by 2022. This reflects steady growth, with no apparent declines or plateaus, indicating positive performance in revenue generation.

Property, plant, and equipment

Investments in property, plant, and equipment also showed a rising trend. Beginning at roughly $3.93 billion in 2017, the amount grew steadily to about $6.06 billion by 2022. This consistent increase suggests ongoing capital expenditures or asset acquisitions, potentially aiming to support business expansion or operational capacity enhancement.

Net fixed asset turnover

The net fixed asset turnover ratio, which measures efficiency in utilizing fixed assets to generate sales, declined gradually from 1.86 in 2017 to 1.46 in 2022. This downward trend indicates a reduction in the efficiency of fixed asset utilization over time, despite the increase in sales. The ratio's decrease may imply that asset growth is outpacing sales growth, potentially signaling underutilized or over-invested fixed assets.

The analysis of the data reveals several notable financial trends over the six-year period from 2017 to 2022.

Net Sales

There is a consistent growth in net sales each year, increasing from approximately US$7.33 billion in 2017 to about US$8.82 billion in 2022. This steady upward trajectory indicates a positive sales performance and an expanding revenue base over the period.

Property, Plant, and Equipment (PP&E)

The value of property, plant, and equipment, including operating lease right-of-use assets, shows a significant upward trend. It rises from roughly US$3.93 billion in 2017 to US$6.54 billion in 2022. This increase suggests sustained capital investment and asset growth by the company, potentially to support its expanding operations.

Net Fixed Asset Turnover

The ratio of net fixed asset turnover exhibits a gradual decline over the period, moving from 1.86 in 2017 down to 1.35 in 2022. This downward trend indicates that although the company is generating more sales, the efficiency with which it uses its fixed assets to generate revenue is diminishing. It suggests that asset growth is outpacing sales growth, resulting in reduced asset turnover.

In summary, the company demonstrates strong sales growth and considerable investment in fixed assets, but with a declining rate of asset turnover. This pattern could imply that the company is either expanding its asset base ahead of sales growth projections or facing challenges in optimizing its asset utilization. Monitoring this ratio alongside future sales growth will be important to evaluate ongoing operational efficiency.

The financial data over the six-year period demonstrates several noteworthy trends in the operational and asset management performance.

Net Sales

There is a consistent upward trend in net sales, increasing from approximately 7.33 billion in 2017 to 8.82 billion in 2022. This represents steady growth year-over-year, indicating a positive trajectory in revenue generation over the period analyzed.

Total Assets

Total assets exhibited an increasing trend from 18.6 billion in 2017 to a peak of about 29.2 billion in 2019. However, following this peak, total assets declined over the next three years, ending at approximately 25.9 billion in 2022. This suggests significant asset expansion until 2019, followed by a contraction or asset reductions in subsequent years.

Total Asset Turnover

The total asset turnover ratio shows a decline from 0.39 in 2017 to 0.28 in 2019, indicating that asset efficiency in generating sales diminished during this period despite increasing sales and asset base. From 2019 onwards, the ratio improves gradually to 0.34 by 2022, reflecting a recovery in asset utilization efficiency, although it has yet to reach the initial 2017 level.

In summary, the company experienced consistent revenue growth with a considerable expansion in total assets up to 2019, followed by asset base reduction thereafter. The asset turnover ratio's initial decline and later recovery suggest fluctuations in how effectively the company deployed its assets to generate sales, with recent improvements indicating enhanced operational efficiency.

The financial data reveals several notable trends over the six-year period analyzed.

Net Sales

Net sales exhibit a consistent upward trajectory from 2017 through 2022. Starting at 7,331,500 thousand US dollars in 2017, net sales increased steadily each year, reaching 8,820,700 thousand US dollars by 2022. This reflects a growth trend in revenue generation over the period.

Total Stockholders’ Equity

Total stockholders’ equity shows a more volatile pattern compared to net sales. It rose notably from 6,891,200 thousand US dollars in 2017 to a peak of 12,551,000 thousand US dollars in 2019. After a slight decline in 2020 to 12,131,800 thousand US dollars and a rebound in 2021 to 13,598,900 thousand US dollars, equity decreased again in 2022 to 11,731,900 thousand US dollars. This fluctuation suggests changes in equity financing or retained earnings possibly influenced by company activities or market conditions.

Equity Turnover

The equity turnover ratio, which measures the efficiency of equity in generating sales, declined from 1.06 in 2017 to a low of 0.63 in 2021 before slightly increasing to 0.75 in 2022. The general downward trend until 2021 indicates reduced efficiency in leveraging equity for sales growth. However, the small uptick in 2022 may suggest early signs of improved utilization of equity.

Overall, the company has demonstrated strong growth in sales, but the fluctuations in equity and the declining trend in equity turnover ratio until 2021 highlight potential challenges in capital efficiency and equity management that warrant closer monitoring. The slight recovery in equity turnover in 2022 may be a positive indicator moving forward.