As bars and restaurants welcome customers again following COVID-19 closures, investors are starting to give alcoholic beverage giants another chance. Constellation Brands (NYSE:STZ) and Molson Coors (NYSE:TAP) are getting extra attention, because between them they cover some of the industry's most attractive growth characteristics.

But while Molson Coors is the cheaper stock today, you're still likely to see higher long-term returns by owning its larger rival.

Let's take a closer look.

Recent results

The novel coronavirus has disrupted the industry, making it more difficult for investors to judge fundamental factors like market share and growth potential. Yet Constellation Brands boasted better momentum heading into the crisis. Sales in its core beer business spiked 11% in the fiscal fourth quarter, which didn't include any COVID-19 related challenges because the period ended on Feb. 29.

Friends drinking beer and wine together.

Image source: Getty Images.

The company notched a few impressive wins in the past year, including a 16% spike in consumption for the Modelo Especial brand and the successful launch of Corona Hard Seltzer. Constellation Brands' operating margin inched up to a record 40% of sales in the beer segment, which finished its 10th consecutive year of volume growth.

The wine and spirits division wasn't as successful, but a return to growth in brands like Kim Crawford and Meiomi, plus rising profitability, suggest management is on track with their rebound plan in that segment.

Molson Coors, meanwhile, announced a 9% sales decline in its last quarterly outing. Adjusted earnings fell to $352 million and pulled profitability lower in the process. Sure, that slump was mostly driven by pandemic-related closures and cancellations of sporting events and concerts, given that the fiscal first quarter runs through late March. Yet Molson Coors was struggling even before the pandemic hit, with volume falling 4% in fiscal 2019.

Financial checkup

Constellation Brands is also in far better fiscal shape. Operating cash flow improved to $2.5 billion in fiscal 2019 from $2.3 billion a year earlier. Molson Coors' comparable metric was flat at $1.4 billion.

STZ Cash from Operations (TTM) Chart

STZ Cash from Operations (TTM) data by YCharts

That success has allowed the imported-beer giant to remain aggressive through the recent market dislocation. In early May, it boosted its stake in marijuana specialist Canopy Growth (NYSE:CGC), for example, while citing the massive untapped potential in the consumer pot market. Molson Coors, meanwhile, has suspended its dividend as part of a huge cost-cutting program aimed at preserving cash.

Looking ahead

Constellation Brands' next earnings report is set for July 1 and will cover some of the most intense impacts from COVID-19 closures in the U.S. market. That situation might set investors up for disappointment, considering the optimism reflected in its share price. The stock had been down by 45% at one point in 2020 but roared back to nearly positive territory by June.

Management's early July comments about its short-term growth opportunities might test that rally, especially as Constellation is likely to start its new fiscal year with a rare volume slump. Its stronger beverage portfolio, ample cash flow, and bold bets on recreational marijuana should still deliver attractive returns for investors over the next few years.