STZ Lost 19% In A Month. Do You Buy Or Wait?
Constellation Brands (STZ) stock is down 19.1% in 21 trading days. While history suggests price dips recover, there is risk – specific to growth and balance sheet. Consider the following data:
- Size: A $24 Bil company with $10 Bil in revenue currently trading at $133.48.
- Fundamentals: Last 12 month revenue growth of -0.5% and operating margin of 31.7%.
- Liquidity: Has Debt to Equity ratio of 0.49 and an extremely low Cash to Assets ratio
- Valuation: Currently trading at P/E multiple of -53.7 and P/EBIT multiple of 1396.1
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 77.4% within a year. See STZ Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for STZ, see Buy or Sell STZ Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and STZ drops another 20-30% to $93.44 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Constellation Brands (STZ) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: STZ provides production, import, marketing, and sales of beer, wine, and spirits across the US, Canada, Mexico, New Zealand, and Italy, featuring numerous renowned wine brands.
2022 Inflation Shock
- STZ stock fell 20.1% from a high of $261.05 on 2 December 2022 to $208.68 on 5 January 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 19 July 2023
- Since then, the stock increased to a high of $272.80 on 31 July 2023 , and currently trades at $133.48
| STZ | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -20.1% | -25.4% |
| Time to Full Recovery | 195 days | 464 days |
2020 Covid Pandemic
- STZ stock fell 49.3% from a high of $208.34 on 20 February 2020 to $105.64 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 3 December 2020
| STZ | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -49.3% | -33.9% |
| Time to Full Recovery | 255 days | 148 days |
2018 Correction
- STZ stock fell 35.6% from a high of $234.22 on 27 April 2018 to $150.94 on 9 January 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 February 2021
| STZ | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -35.6% | -19.8% |
| Time to Full Recovery | 763 days | 120 days |
2008 Global Financial Crisis
- STZ stock fell 62.8% from a high of $29.02 on 1 January 2007 to $10.80 on 12 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 13 July 2012
| STZ | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -62.8% | -56.8% |
| Time to Full Recovery | 1339 days | 1480 days |
Worried that STZ could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.