SUNY Geneseo Student Research
This report is published for educational purposes
only by students competing in the CFA Institute
Research Challenge.
Constellation Brands Inc. Cl A
Ticker: STZ [NYSE]
Price: $21.03
January 20, 2012
Beverages: Alcoholic
Recommendation: Hold
Price Target: $24.00
Earnings/Share
2010A
2011A
Q1 (May)
$0.33
0.38
2012E
2013E
0.39
0.49
Q2 (Aug)
$0.54
0.52
0.77
0.63
Q3 (Nov)
$0.54
0.66
0.50
0.63
Q4 (Feb)
$0.27
0.35
0.38
0.47
Year
$1.69
1.91
P/E
Ratio
8.9x
10.6
2.05
2.22
10.2
9.4
Highlights

We issue a hold rating on Constellation Brands Inc. with a 12 month price target of $24.00,
offering a 14.1% upside. Constellation Brands has growth potential, our model assumes a 10%
EBIT growth rate for the next five years based on increasing wine sales, innovation and the
stabilization of consumer expectations. Constellation Brands has also been able to effectively
control costs and pay down debt. However, the two major risks to this price target are the growth of
operating income and the significant amount of financial leverage.

Movement towards a premium wine portfolio. Over the past four years Constellation Brands has
decreased its value wine brand offerings (under $10 a bottle) to focus on its premium, higher price
point brands with higher margins. Since embarking on this strategy, premium sales are lower, but
margins have been improving. In the long run this can help the company deleverage.

Record free cash flow. Constellation Brands’ free cash flow has been very high for the past three
years. This increase in free cash flow has enabled Constellation Brands to deleverage and buy back
stock to increase shareholder value.

Growth in Crown Imports sales despite slow moving industry. Constellation Brands, in a joint
venture with Grupo Modelo S.A.B. de C.V., markets a portfolio of imported beer including Corona,
the top selling imported beer in the United States. Corona has posted single digit sales at a time
when the imported beer industry has been down by two percent.
Market Profile
STZ Daily Stock Price
$24
$23
$22
$21
$20
$19
$18
$17
$16
$15
Jan-11
52 Week Price Range
Average Daily Volume (3 Mo)
Beta
Dividend Yield
Shares Outstanding (M)
Market Capitalization (M)
Institutional Holdings
Insider Holdings
Apr-11
Jul-11
Oct-11
Jan-12
Book Value per Share
T otal Debt to T otal Capital
Return on Equity
$16.42 - 23.19
1,772,499.50
1.04
0.00%
202.4
4,203
89.8%
0.35%
$13.19
54.1%
23.2%
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Business Description
Constellation Brands Inc. is world’s leading premium wine company. The company produces and markets
alcoholic beverages with a large portfolio of brands in the wine, spirits, and imported beer categories. The
company has operations in the United States, Canada, and New Zealand. The company has three distinct
business segments, Constellation Wines North America, a 20% remaining equity stake in Constellation
Wines Australia and Europe (branded wine and spirits) as well as Crown Imports (imported beer). It produces
and sells over 100 brands of beer, wine, and liquor in nearly 125 countries.
The company has than 4,000 employees worldwide and is headquartered in Victor, New York. The company
owns many prominent brands including SVEDKA Vodka, Black Velvet Canadian Whisky, Paul Masson
Grande Amber Brandy, Robert Mondavi Brands, Clos du Bois, Arbor Mist, and Black Box.
Crown Imports, a joint venture with Grupo Modelo S.A.B. de C.V., produces leading imported beers in the
United States. Among imported beers offered through Crown Imports include the Corona family of beers, St.
Pauli Girl (the second highest selling German Beer), Tsingtao (the top-selling Chinese Beer), Modelo
Especial and Negra Modelo. Crown Imports has six of the top-selling 25 imported beer brands and distributes
in all 50 states.
Constellation Brands’ three largest business segments include: 1. Constellation Wines North America which
is responsible for 44.7% of revenues and $631 million operating income, 2. Crown Imports generates 41.8%
of revenues and $453 million in operating income, 3. Constellation Wines Australia and Europe generates
13.5% of revenues and $9 million in operating income.
Principal Competitors
The Constellation Brands’ principal competitors in the United States include E&J Gallo Winery, Foster's
Group, W.J. Deutsch & Sons, Ste. Michelle Wine Estates, Kendall-Jackson, Diageo and Brown-Forman. In
Canada principal competitors include Andrew Peller, Foster's Group, Kruger and E&J Gallo Winery. In the
United Kingdom principal competitors include Foster's Group, Diageo, E&J GalloWinery and Pernod Ricard.
Constellation Brands’ principal distilled spirits competitors include Diageo, Fortune Brands, Bacardi, Pernod
Ricard, and Brown-Forman.
Crown Imports' principal competitors include Anheuser-Busch, Heineken International and SABMiller.
Industry Overview
The wine, beer and spirits industry is typically thought to be one that sells a non-cyclical, consumer staple.
The Great Contraction of 2007-present tell us something different. With large disruptions to consumer
expectations and wealth, consumption of alcohol decreased on a broad basis in the past two years. There were
a number of bright spots during the darker years. Value wine brands and some finer wines have succeeded in
being recession-resilient and have seen sales growth in line with general industry growth going forward, in
the 3% area. Domestic sales in the beer industry have fallen 1.5%-3% annually for the past three years but
craft beers have experienced nearly double-digit growth in the same time and, as experts have observed, have
taken customers away from the imported beers segment. Liquor and spirits have done well and are seemingly
just the right amount of anesthesia consumers need when concerned about macroeconomic effects. This holds
especially true for the SVEDKA brand which has exceeded every growth expectation by holding fast to what
other vodka brands seem to have forgotten about- fun.
Going forward, we expect more pricing power for wine producers so long as consumer expectations continue
to stabilize. This of course depends on significant macroeconomic pressures that are still in the pipeline:
Eurozone challenges, homeowners with negative equity increasing, and government deficits. Symphony IRI
predicts a wine industry growth rate of around 3% for the next several years as business conditions improve.
Long-term Generational Trends
While wine is certainly subject to shorter-run trends like the business cycle, the industry is also affected by
long-term factors like the U.S. generational shift. The millennial generation (21-34 years old) has
demonstrated affection for wine. Now more than half of millennials are core wine drinkers, meaning that they
drink wine at least once per week. This generation has also shown a preference for more premium wines as
well as a greater degree of wine savviness than the Boomers and Gen X generations. However optimistic
these data may make producers, it’s important to recognize that the 55 and over age group account for 44% of
wine sales while the millennial generation is not even half that. This is an obvious effect of high youth
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unemployment and low wealth relative to the older generations. Wine, despite its growing popularity, is still a
luxury item.
In Affluence We Trust
The top 20% of U.S. household income earners account for 80% of premium wine sales and, considering
recessionary pressures, are the only demographic who are going to full-service, white cloth restaurants where
premium and fine wines are sold on-premises. Restaurant sales are set to increase due to stabilizing consumer
expectations but this trend will take longer than the trade-up of premium wines off-premises. Premium brands
marketing efforts should be aimed towards the affluent as the recessionary pressures subside.
Brewer Consolidation and the Plight of Size
After a decade of mergers and acquisitions, nearly 90% of the beer sold in the U.S. is made by the top four
brewers. During the Great Contraction however, beer sales have been down from 1.5-2% each year which is
the same fate for the imported beer category. The only segment in the industry to have grown steadily is craft
beer, which has experienced double digit growth since 2003. Heineken and Corona are by far the two largest
players in the imported category, and Corona has been able to outpace the decline of the category by brand
loyalty and strong marketing.
Competitive Positioning
Corporate Strategy and Recent Divestitures
Recently the company has been moving towards a more premium wine portfolio by selling off less profitable
brands and retaining only those brands that show sustainable profits and growth potential. This is intended to
produce sustainable organic growth going forward along with higher margins.
In early 2011 the company sold off more than 80% of its UK and Australian business. The divestitures were
in line with the company’s “premiumization” strategy to increase profitability and return on investment.
Among these, the company sold the UK Cider business responsible for less than 17% of Constellation Wines
Australian and Europe sales. Prior to the sale of the UK Cider business the company sold off a portion of its
value spirit brands in hopes of maintaining high margins and sustainable growth.
Larger wine and spirit companies can experience significant economies of scale due to established
distribution channels with wholesalers and retailers.
Competitive Position: SWOT Analysis.
Strength - Increasing Profitability
The company's profits have been increasing over the past three years. The operating income of the company
in the fiscal years 2011, 2010 and 2009 was $502.5m, $310.8m and $29.6m respectively. Profitability
indicators of the company such as operating margin and return on assets have also increased substantially in
the FY 2011.
Operating Margin
Return on Assets
2011
15.1%
7.8%
2010
9.2%
1.2%
2009
0.8%
-3.3%
Strength - Dominant Position in the Wine Industry
Constellation Brands is one of the largest producers of premium wines in the world. It is the largest premium
wine company in the US. The company produces and sells more than 100 brands of beer, wine, and liquor.
The company operates in the US, Canada, the UK, Australia, and New Zealand. The company is the leading
wine company in the UK, Canadian and Australian wine markets, and ranks number two in New Zealand. It
is the largest beer importer and marketer in the US through Crown Imports LLC, which is a joint venture with
Grupo Modelo.
Weakness - Geographic Concentration
A major portion of the revenues are generated from the United States even though the company operates in
125 countries and has major operations in Canada and New Zealand. The company is highly dependent on
the US market for its revenues. High dependence on one country does not help the company to alleviate risks
associated with uncertainties in a particular economy.
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Opportunity - Innovation
Unoaked and sweet wines, such as the Simply Naked brand and Moscato, respectively, are at the frontier of
wine consumers’ tastes. Constellation Brands is well positioned in these categories with brands already in
place and a marketing effort with Dave Matthews to attract a younger audience.
Opportunity - Rising Demand for Wine in the US
The United States wine market is one of the fastest growing markets in the world in terms of production as
well as consumption. The market has been witnessing steady growth for the past few years, particularly with
the younger population. This gives an opportunity for Constellation Brands to expand and grow. According to
a report by 'US Wine Market Forecast to 2012', the US wine market is expected to become the market leader
in wine consumption by volume. The US wine market is expected to reach a value of around $33.5 billion
with 871 million gallons of wine sales by 2013. As the company has major part of its operations in the North
America region, it is likely to find more growth in the region with such attractive market conditions.
Threat - Intense Competition
The company operates in a highly competitive environment. Competition is expected to increase further in
the near future with the entry of new players in this market. This could result in price reductions. The
company faces stiff competition from a broad range of companies which have substantially greater financial,
marketing and distribution resources. Its key competitors include Diageo plc, Heineken N.V., E.J.Victor, Inc.,
InBev NV, Pernod Ricard, Foster's Group Ltd., C&C Group plc, and Remy Cointreau, among others. If the
company is not able to maintain product quality and consumer loyalty, this intense competition could affect
the sales volume of the company, thereby reducing its market share.
Competitive Positioning: Porter’s Five Forces
Constellation Brands is an industry leader in the North American market. The company utilizes a large
amount of financial leverage to remain competitive, this is characteristic of large stagnating companies. Sales
growth in the industry is slow and firms seek to maximize operating margins and combine it with financial
leverage to affect net income.
Threat of New Entrants
The level of competition in the wine industry is extremely high. The threat of new entrants is primarily
influenced by factors such as: economies of scale, capital investment requirements, and distribution channels.
Economies of scale factors have gained popularity as competition has increased in the last decade. Economies
of scale have allowed for vertical integration in the wine industry. By making large companies even larger,
vertical integration has had a major effect in decreasing entries into the wine industry.
Larger firms have a competitive advantage in breadth of their distribution. That is, larger firms have more
resources to market their brands. However, depending on a company’s brand image and positioning
objectives, distribution advantages of larger firms are not always a major problem. For example, a premium
brand of wine positioned to be elite and superior in quality, does not need to have a distribution channel that
it as complicated as everyday/lower quality wines. In such instance, the advantage of vertical integration in
the distribution channel is not difficult to overcome.
Threat of Substitutes
The threat of substitutes in the alcoholic industry is substantial. Wine must compete with beer, distilled
spirits, and malt beverages (i.e. Smirnoff Ice). Constellation is well positioned in this sense because it has
offerings in three of these four categories. Wine has become an attractive industry because it can satisfy the
needs of consumers just as well as beer and distilled spirits and is considered by some a healthier choice.
Bargaining Power of Consumers
Switching costs are low in the alcoholic beverages industry and there is little brand loyalty in lower end wine
market. Constellation Brands has been in the process of selling its cheaper brands in order to boost the
premium appearance of its overall portfolio. For the most part, wines labeled under various brands are not
unique and Constellation Brands is competing in a monopolistically competitive market.
Bargaining Power of Suppliers
Bottling is Constellation Brands’ second largest cost of goods sold. The company’s bottlers are very
concentrated and its suppliers of glass for bottling are even more limited. Increases in the cost of glass
bottling will have a significant impact on Constellation Brands’ gross margins. While there are substitutes for
glass bottling, there are no substitutes for the inputs of wine, beer, and distilled spirits. Increases in prices of
input commodities will to a drop in gross margins if not accompanied by price increases in goods sold. The
company does engage in hedging activities but only to a limited extent.
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Intensity of Competitive Rivalry
Competitive rivalry largely results due to advertisement costs. Constellation Brands advertisement costs are
well tamed. Advertising expense for the years ended February 28, 2011, February 28, 2010, and February 28,
2009, was $128.6 million, $132.5 million and $175.7 million, respectively.
Investment Summary
We assign a target price of $24 to Constellation Brands, this provides an upside of 14.1% from the current
stock price. We expect operating income to grow by 10% per year for the next five years. The largest risk to
this stock price is the growth of operating income and financial leverage.
The company will be using the strong free cash flow to pay off substantial amount of debt and fund the stock
repurchases. The expectation of lower borrowing in the future coupled with debt repayment will result in a
lower interest expense. In addition, the company expects diluted EPS of $2 - $2.10 for the fiscal year 2012.
Crown Imports is a promising venture for Constellation Brands. With this venture, Constellation Brands is
the leading marketer of imported beer in the United States. Crown Imports is currently outperforming the
industry, leading in the import category.
The main risk associated with the movement towards a more premium wine portfolio is the company’s
dependency on the development and marketing of these premium brands. Additionally, competitors pose a
threat to the sales volume and market share of Constellation Brands’ new premium brands.
Figure 1: Constellation Brands Inc. Stock Price and News
Source: Factset Research Systems
Valuation
We approached fair value for Constellation Brands Inc. using two methods. The first was a discounted cash
flow (DCF) analysis and the second was a multiples analysis. Our DCF analysis supports a 12-month price
target of $24, while the multiples analysis supports a $24.50 price target for the next twelve months.
Discounted Cash Flow Analysis
Due to the diverse nature of the business segments operated by Constellation Brands Inc. we found it
appropriate to assess the contributions of each segment to operating income separately and use growth rates
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appropriate to each segment. Estimating FY 2012 EBIT only required an accurate estimate for the fourth
fiscal quarter. The company’s tax rate applied in the model was 35% as deemed appropriate by historical
trends. Capital expenditure, depreciation, and amortization were applied to the model using historical
common size trends relative to sales. Changes in working capital were observed to be volatile over the past
five years so a simple average was applied. The appropriate discount rate was determined using the capital
asset pricing model and the terminal free cash flow to firm growth rate was estimated to be 3.0%.
Multiples Analysis
The price multiple we applied in this valuation method was Price to NTM Earnings. The historical average of
P/E – NTM over the past 10 years is 12.1x. To arrive at our price target of $24.50 we multiply the P/E –
NTM multiple by the $2.03 NTM basic EPS estimate.
Risks to Price Target
Primary risks to both methods applied to determine our price target are: 1. Reduced consumer demand for
wine, 2. Slower EBIT growth than has been observed over last two years, 3. Increasing commodity prices
leading to lower gross margins, 4. Loss of market share.
Financial Analysis
The company reported revenues of $3,332 million during the fiscal year ended February 2011, a decrease of
0.97% from 2010. The operating profit of the company was $502.50 million during the fiscal year 2011, an
increase of 61.68% over 2010. The net profit of the company was $559.50 million during the fiscal year
2011, an increase of 463.44% over 2010.
During fiscal year 2011, the company generated 62.6% of its revenue from the US, followed by the UK,
14.3%; Australia (8.3%) New Zealand (1.6%); Canada, 12.3% and Other, 0.6%. This dominant position in
the market and wide international presence helps the company in maintaining its market share and give it the
power to attract new customers and venture easily into new businesses.
Constellation Brands has seen positive changes to their cash flow in recent years. Free cash flow for nine
months in 2012 was $587 million. The new target for the annual cash flow is set to $700 - $750 million. This
excess cash will be used to pay off substantial debt and to repurchase stock. During the first nine months of
fiscal 2012 Constellation Brands repurchased 15 million shares. The decrease in interest expense is a result of
lower average borrowings and deleveraging.
Earnings
Constellation Brands Inc. had net income of $559.5 million during the fiscal year (FY) ending February 28,
2011. The company reported net income of $342.0 million during the nine months ending November 30,
2011. Our estimate for net income for FY 2012 is $423.4 million. This is a 24.3% decrease year over year,
but the company had a large divestiture of its United Kingdom and Australian operations this year. A more
appropriate comparison would be profit margins. During FY 2011 net profit margin was 16.9% compared to
an estimated FY 2012 net profit margin of 16%.
Net Income
Net Profit Margin
EPS
Diluted EPS
2012E
$423.4 million
16%
$2.22
$2.19
2011
559.5 million
16.9%
2.44
2.162
2010
99.3 million
3.0%
0.41
0.372
2009
-301.4 million
-8.2%
-1.27
-1.272
Constellation Brands Inc.’s sales observe seasonal fluctuations. In general, sales are weakest early in the
calendar year and increase monotonically until they reach a relative peak at calendar year end. Since sales
peaked in 2007 at a value of $5.22 million they have been in secular decline. The large decrease in sales this
year is largely due to the divestiture of United Kingdom and Australian operations.
Over the past eight years the company’s cost of goods sold relative to sales has fallen from 72% to 64%, thus
contributing to the increase in gross margin from 27% to 35%.
EBIT shows seasonality with the fiscal quarter (FQ) ending in November having higher earnings than FQ
ending in February. EBIT grew at a CAGR of 20% from 1997 to 2007. EBIT decreased at a CAGR of 27%
from 2007 to 2009. EBIT grew at a CAGR of 14% from 2009 to 2011. EBIT (operating) margins have
improved from 10.9% during 2009 to 23.9% as of FQ ended November 2011.
From FY 2008 to FY 2011 the company had an impairment of intangible assets equal to 7% of sales during
the same four year period. The FY 2008 impairment was 22% of that year’s sales. During FY 2009 a
goodwill write off of 7% of sales occurred. Since then pretax margins have returned to the historical average.
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Since FY 2008, the company has had sizable after tax adjustments in the favor of net income every year.
When this adjustment disappears net margin return to its historical norm of 4% to 7% as opposed to its FY
2011 value of 16.9%
Cash Flow
Based off of Constellation Brands’ most recent annual financial data and their competitors’ financial data we
have calculated each companies ratio of Price-to-Cash from Operations. From our analysis it is clear that
Constellation Brands cash flow is undervalued as compared to their competition. For the consistency of our
analysis we will not consider Beam Inc. into the analysis for its relatively small market capitalization and its
outlier ratio of Price-to-Cash from Operations. When comparing Constellation Brands with Diageo and
Brown-Forman it is clear that Constellation Brands cash from operations is relatively cheap.
Company
Market Cap
Constellation Brands (STZ)
Cash From Operations
Market Cap to Cash
$4,012,162,600
$619,300,000
6.5
Brown-Forman (BF.B)
$11,149,868,700
$527,000,000
21.2
Diageo (DEO)
$54,378,480,000
$2,091,000,000
26.0
Focusing on Constellation Brands alone, it is encouraging to see relatively consistent and increasing cash
from operations in conjunction with an increase of paying down debt. Over the past four years Constellation
Brands has increased Cash from operations by 100 million dollars (19.14% growth). During the same time
period the company has paid down more than a billion dollars in debt from the issuance of bonds and other
methods of financing.
Balance Sheet and Financing
Over the past four years Constellation Brands has divested a portion of its business in Europe. This action has
had direct effect on the company’s balance sheet. Since Constellation Brands began divesting a portion of its
wine portfolio in Australia and Europe, total assets have declined by more than 40% from $10 billion in 2008
to $7.2 billion in November of 2011. Because of the divestitures taking place over this time period, the 40%
reduction in the company’s total assets is not something to be concerned with. During the same four year time
span beginning in FY 2008 long and short term liabilities have been decreasing proportionately with the
company’s decrease in assets. From FY 2008 to this most recent quarters report, total liabilities have
decreased 57% from $7.2 billion in 2008 to $4.6 billion in November of 2011. It is encouraging that not only
have liabilities have been decreasing proportionately with assets through the recent divestitures, but the
company has reduced its financial leverage ratio over this time period from 3.6 in FY 2008 to 2.8 in
November of 2011.
Corporate Life Cycle
Of the five major categories in the corporate life cycle (Innovation, Expansion, Leadership, Mature, and
Stagnant), Constellation Brands is a stagnant company according to our eight factor model. The factors used
in our model are sales growth, gross income margin, years publicly traded, debt/capital, market value, rate of
change of market share, and rate of change of return on invested capital. Compared to the constituents of the
S&P 500, Constellation Brands is in the lowest quintile for sales growth, near the median for gross margin,
highest quintile for debt/capital, and the lowest quintile for rate of change of return on invested capital.
Constellation Brands belongs in the stagnant category for following primary characteristics: 1. poor sales
growth, 2. high debt/capital ratio, 3. negative rate of change of return on invested capital.
Investment Risks
In this section we identify the main risks that Constellation Brands faces.
Strong Competition: The wine and spirits industry is extremely fragmented; no one company has an overly
dominant market share. In addition, the barriers to entry in the wine industry are very low. Constellation
Brands faces strong competition from new entrants and existing competitors in terms of price, quality, and
brand recognition. This strong competition might drive down average wine prices which will be a hurdle for
Constellation Brands since one of its current strategies includes increasing prices.
Costs related to acquisition, sale, and divestiture of brands: Constellation Brands has made various brand
acquisitions and hopes to continue this strategy in the future. The costs of successfully merging new brands
into existing operations could be high and materially affect their financial position. Similarly, Constellation
Brands sells brands that do not do well in the market. The company may incur losses in such situations,
where the brand is sold for less than the costs it accumulated. Its recent U.K. and Australia business was sold
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to increase efficiency and cut the losses they were facing in those areas. The company might divest certain
brands in future based on similar reasons which reduce market share.
Change in foreign currency exchange rates and interest rates: Constellation Brands has operations in
New Zealand and Canada, and it sells its products in several countries around the world. As a multinational
company, Constellation Brands is exposed to market risk from changes in foreign currency exchange rates
and interest rates that could affect the financial condition of the company. The company is exposed to foreign
exchange risk through cash flow in connection with sales outside the United States. The company also
engages in hedging for both commodities prices and exchange rates which imposes other risks.
Increase in raw material and commodity prices: The principal materials that go into making wine are
grapes, grains and glass for bottling the wine. The grapes prices depend mainly on the harvest season. A weak
harvest season could drive up grapes prices which will result in higher cost of goods sold for Constellation
Brands. Similarly, the glass bottle industry in the U.S. is highly concentrated with only a small number of
producers. If the current arrangements with the limited number of glass suppliers do not succeed, the
company might face immediate bottling problems.
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Disclosures:
Ownership and material conflicts of interest:
The authors, or a member of their household, of this report does not hold a financial interest in the securities of this company.
The authors, or a member of their household, of this report does not know of the existence of any conflicts of interest that might bias the content or
publication of this report.
Receipt of compensation:
Compensation of the authors of this report is not based on investment banking revenue.
Position as a officer or director:
The authors, or a member of their household, do not serves as an officer, director or advisory board member of the subject company.
Market making:
The authors do not act as a market maker in the subject company’s securities.
Ratings guide:
Banks rate companies as either a BUY, HOLD or SELL. A BUY rating is given when the security is expected to deliver absolute returns of 15% or greater
over the next twelve month period, and recommends that investors take a position above the security’s weight in the S&P 500, or any other relevant index.
A SELL rating is given when the security is expected to deliver negative returns over the next twelve months, while a HOLD rating implies flat returns over
the next twelve months.
Disclaimer:
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be reliable, but
the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is not intended to be used
as the basis of any investment decisions by any person or entity. This information does not constitute investment advice, nor is it an offer or a solicitation of
an offer to buy or sell any security. This report should not be considered to be a recommendation by any individual affiliated with [Society Name], CFA
Institute or the CFA Institute Research Challenge with regard to this company’s stock.
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