Constellation Brands, Inc. (STZ), Anheuser-Busch InBev NV (ADR) (BUD): An Alcoholic Beverage Company With Great Potential

STZ Profit Margin TTM data by YCharts

As you can see, the past year hasn’t been overly impressive. Costs have increased, but once the company settles in to its new deals, profit margin should recapture its upward momentum.

Sometimes when it’s difficult to make an investment decision in an industry, it’s best to look at dividend yield. Even if you make the wrong decision, the dividend payments will at least help ease the pain. And if you make the correct decision, the dividends act as a bonus. Below are dividend yields for each company:

• Constellation Brands No Yield
• Anheuser-Busch 2.00%
• Molson Brewing Company 2.60%

Unfortunately, Constellation Brands has a debt-to-equity ratio of 1.17 versus an industry average of 0.60. Therefore, it’s not likely that the company will pay any dividends in the near future. Plus, Constellation Brands has a different focus: growth..

Conclusion

Instead of paying dividends, Constellation’s using its cash to expand operations and improve brand recognition.

Another important note: CEO Rob Sands stated that he’s not concerned about the global economy’s effect on his business. In his opinion, the company has all the tools to be successful. As an investor, you want to hear this kind of talk, opposed to a CEO warning about the potential effects of the global economy on the business.

Constellation Brands is the world leader in premium wine, the No. 3 beer company in the United States, and the leading wine company in Canada. These are impressive stats, and based on recent expansions, there are likely to be more impressive stats added to this list in the future.

Constellation Brands might not sell healthy products, but it might be a healthy investment.

The article An Alcoholic Beverage Company With Great Potential originally appeared on Fool.com.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Molson Coors Brewing Company. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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