Constellation Brands (NYSE:STZ) vs. Brown Forman (NYSE:BF.A) Financial Analysis

Constellation Brands (NYSE:STZ) and Brown Forman (NYSE:BF.A) are both large-cap consumer staples companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Valuation and Earnings

This table compares Constellation Brands and Brown Forman”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Constellation Brands	$9.14 billion	2.69	$1.69 billion	$9.59	14.86
Brown Forman	$3.91 billion	3.20	$869.00 million	$1.72	15.87

Constellation Brands has higher revenue and earnings than Brown Forman. Constellation Brands is trading at a lower price-to-earnings ratio than Brown Forman, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

77.3% of Constellation Brands shares are held by institutional investors. Comparatively, 3.8% of Brown Forman shares are held by institutional investors. 12.5% of Constellation Brands shares are held by insiders. Comparatively, 4.0% of Brown Forman shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Constellation Brands has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500. Comparatively, Brown Forman has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Profitability

This table compares Constellation Brands and Brown Forman’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Constellation Brands	17.29%	26.18%	9.51%
Brown Forman	20.64%	19.93%	9.85%

Analyst Ratings

This is a breakdown of current ratings and price targets for Constellation Brands and Brown Forman, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Constellation Brands	2	7	12	1	2.55
Brown Forman	0	0	0	0	0.00

Constellation Brands presently has a consensus price target of $176.30, suggesting a potential upside of 23.67%. Given Constellation Brands’ stronger consensus rating and higher possible upside, analysts clearly believe Constellation Brands is more favorable than Brown Forman.

Dividends

Constellation Brands pays an annual dividend of $4.12 per share and has a dividend yield of 2.9%. Brown Forman pays an annual dividend of $0.92 per share and has a dividend yield of 3.4%. Constellation Brands pays out 43.0% of its earnings in the form of a dividend. Brown Forman pays out 53.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Constellation Brands has raised its dividend for 5 consecutive years.

Summary

Constellation Brands beats Brown Forman on 13 of the 18 factors compared between the two stocks.

About Constellation Brands

Constellation Brands, Inc., together with its subsidiaries, produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company provides beer primarily under the Corona Extra, Corona Familiar, Corona Hard Seltzer, Corona Light, Corona Non-Alcoholic, Corona Premier, Corona Refresca, Modelo Especial, Modelo Chelada, Modelo Negra, Modelo Oro, Victoria, Vicky Chamoy, and Pacifico brands. It also offers wine under the Cook’s California Champagne, Kim Crawford, Meiomi, Mount Veeder, Ruffino, SIMI, My Favorite Neighbor, Robert Mondavi Winery, Schrader, and The Prisoner Wine Company brands; and spirits under the Casa Noble, Copper & Kings, High West, Mi CAMPO, Nelson’s Green Brier, and SVEDKA brands. The company provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. Constellation Brands, Inc. was founded in 1945 and is headquartered in Victor, New York.

About Brown Forman

Brown-Forman Corporation manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs. The company offers its products primarily under the Jack Daniel's, Woodford Reserve, Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, Old Forester, Early Times, Slane Irish Whiskey, Coopers' Craft, el Jimador, Herradura, New Mix, Pepe Lopez, Antiguo, Finlandia, Korbel Champagne, and Sonoma-Cutrer brands. It is also involved in the sale of used barrels, bulk whiskey, and wine; and provision of contract bottling services. The company serves retail customers and consumers through distributors or state governments; and retailers, wholesalers, and provincial governments directly. It has operations in the United States, the United Kingdom, Germany, Australia, Mexico, and internationally. Brown-Forman Corporation was founded in 1870 and is headquartered in Louisville, Kentucky.