Shares of Constellation Brands Inc. (STZ) hit a 52-week high of $99.26 on Dec 23, 2014, before eventually closing at $99.14. The stock has amassed a year-to-date return of 42.4%.
The stock has been performing well on the back of its strategy of driving long-term growth through acquisitions and expansions, its efforts to include new products in its wine and spirits businesses and favorable sales growth outlook.
Progressing with its inorganic growth strategy Constellation Brands recently entered into 50-50 joint venture with Owens-Illinois to acquire a glass plant in Nava, Mexico.
Through investment in this joint venture and the acquisition of the glass plant, Constellation Brands has taken its glass sourcing strategy a step forward as it expects the facility to cater to more than 50% of the glass demand of its U.S. beer business.
The acquisition will also help gain better control of its glass needs in terms of quality, flexibility, and cost-effectiveness. Moreover, the company believes these actions will help it to make the most of the ongoing momentum and available growth opportunities in its beer business improving the financial performance of the company.
Further, as the largest wine company in the world, Constellation Brands has a formidable portfolio of well-known brands and enjoys a predominant position in the premium wine and beer segment in the U.S. Moreover, the company’s consistent focus on brand building and its initiatives to include new products in its wine and spirits business are likely to be key revenue drivers for the stock, amid this holiday season.
Investors also remain optimistic due to the company’s robust second-quarter fiscal 2014 performance, wherein both top and bottom lines grew year over year. Adjusted earnings jumped 15.6% year over year to $1.11 per share from $0.96 posted in the comparable year-ago quarter, driven by outstanding performance at its segments. Net sales also soared nearly 10% to $1,607.6 million from $1,459.8 million.
Looking forward, the company expects its growth momentum to continue, which was well reflected in its robust fiscal 2015 earnings guidance. This Zacks Rank #3 (Hold) company envisions adjusted earnings to be in the range of $4.10–$4.25 per share, compared with $3.25 earned in fiscal 2014. Also, it expects to generate operating cash flow of roughly $1 billion in fiscal 2015.
Apart from Constellation, L Brands, Inc. (LB), The Clorox Company (CLX) and Colgate-Palmolive Co. (CL) also hit 52-week highs of $85.28, $106.23 and $71.21 respectively, on Dec 23.
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