It’s time to take advantage of Constellation Brands Inc.’s STZ bull run, as shares of the company seem to be on a roll, having surged 49.1% year to date. Also, this Zacks Rank #2 (Buy) stock hit a 52-week high of $144.87 yesterday, before eventually closing at $144.25.
The Driving Factors
Constellation Brands has been gaining from its solid brand portfolio, strategic growth initiatives, impressive earnings trend and robust financials.
The company occupies a predominant position in the premium wine and beer segment in the U.S. In fact, in second-quarter fiscal 2016, it generated nearly 45% of the total volume growth in the overall U.S. beer industry. This marked its beer portfolio’s twenty-second straight quarter of gains in market share volume.
The company’s consistent focus on brand building and its efforts to include new products in its wine and spirits business are the major revenue drivers for the stock. Moreover, Constellation Brands has been undertaking meaningful acquisitions and joint ventures, which appear promising and beneficial for its business.
Evidently, in a recent development, Constellation Brands agreed to acquire San Diego-based Ballast Point Brewing & Spirits. This buyout will not only widen Constellation brands’ craft beer offering, but will also enhance its footprint in the premier U.S. beer market.
Apart from Constellation Brands, various other brewers like Anheuser-Busch InBev SA/NV BUD, Boston Beer Co. Inc. SAM and Heineken NV HEINY, are striving to expand in the booming craft beer space, as consumer preference for this category of beer has been on the rise.
Coming back to Constellation Brands and taking a look at its earnings history, we note that the bottom line has outperformed the Zacks Consensus for four successive quarters now, with an average surprise of nearly 10%.
In the most recently reported second-quarter results, the company’s top and bottom lines exceeded expectations and improved year over year, thereby encouraging management to raise its outlook for the fiscal year. The encouraging results and outlook were backed by continued strength in the company’s beer business, improving trends at its wine and spirits business, and solid overall depletion trends.
Additionally, Constellation Brands flaunts a healthy financial status and remains committed to its shareholders, as is evident from its consistent cash flow generation, raised free cash flow and operating cash flow expectations for fiscal 2016, and dividend payment. With continued strength in its cash generating ability and sustained growth, Constellation Brands expects to return more value to shareholders in the future.
Last but not the least, the company possesses a long-term growth rate of 14%, which is well above the industry average of 4.5%, further underscoring its future prospects.
We believe that all the aforementioned factors highlight this alcohol-beverage producer’s solid growth prospects. This instills confidence among investors, and in turn keeps them in good spirits.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment