Spiros Segalas Buys Stake in Constellation Brands

GuruFocus.com

Sat, Jul 16, 2016, 6:22 PM

- By Kyle Ferguson

During the second quarter, guru Spiros Segalas purchased a 673,131-share stake in Constellation Brands Inc. (STZ). The company is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy.

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STZ 15-Year Financial Data
The intrinsic value of STZ
Peter Lynch Chart of STZ

Constellation Brands has a market cap of $33.2 billion, an enterprise value of $40.98 billion and a P/B ratio of 4.90.

The company was founded in 1945 and has grown to become a significant player in the beverage alcohol industry with more than 100 brands in its portfolio. The company owns some of the most prestigious beers in the world including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico.

According to GuruFocus, Constellations Brand has a 5/10 financial strength rating with an 8/10 profitability and growth rating. The company has an operating margin of 27.85%, which ranks it above 91% of the 214 companies in the Global Beverages - Wineries & Distilleries .

Spiros Segalas (Trades, Portfolio) may have purchased a stake in Constellation Brands for the following reasons:

The company has established itself with a strong differentiation advantage, holding some of the most prestigious alcoholic beverages inside its portfolio.
The company has solid momentum. Over the last year, the price of Constellation Brands has risen 39%.
The company is expanding its operations, which is usually a good sign.
The company has reported excellent growth in its Ebitda per share over the previous five years.
During the past five years, the average Ebitda per share growth rate was 31%, which is an excellent sign.

In conclusion

Constellation Brands owns many prestigious alcoholic bands in its portfolio. The company has gained solid momentum over the previous year, rising 39% in price while reporting an excellent Ebitda per share growth rate of 31% over the past five years. All of these factors likely influenced Segalas to purchase a stake during the second quarter.

Cheers to your investment success.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.