Shares of Constellation Brands Inc. (STZ) hit a new 52-week high of $109.38 on Jan 15, 2015, before eventually closing at $108.18. The rise came on the back of the company’s recently announced third-quarter fiscal 2015 results and an encouraging outlook for the year.
This leading international producer and marketer of beverage alcohol brands reported impressive third-quarter results, wherein both top and bottom lines increases year over year and beat the Zacks Consensus Estimate.
Adjusted earnings jumped 11.8% year over year to $1.23 per share, cruising ahead of the Zacks Consensus Estimate of $1.14, driven by the strength in its beer business. Net sales soared nearly 7% to $1,541.5 million from $1,443.3 million in the third quarter of fiscal 2014. Further, the company’s top line surpassed the Zacks Consensus Estimate of $1,504 million.
The increase in revenue was attributed to strong volumes at the beer business, which contributed 16% to the segment’s growth. Beer segment sales also benefited from a shift of second-quarter fiscal 2015 sales into this quarter, owing to the recall of Corona Extra, declared earlier. Excluding the effect of the recall, sales at this segment improved 11%, on the back of a strong product portfolio and solid demand.
Following the strong third-quarter results, this Zacks Rank #2 (Buy) company increased its full-year outlook. Constellation Brands now estimates adjusted earnings in the range of $4.25–$4.35 compared with $4.10–$4.25 per share predicted earlier. On a reported basis, earnings per share in fiscal 2015 are anticipated to be in the range of $3.90–$4.00, up from $3.85–$4.00 per share projected earlier.
The stock has also been performing well aided by its strategy of driving long-term growth through acquisitions and expansions. Progressing with this strategy, Constellation Brands recently entered into 50-50 joint venture with Owens-Illinois to acquire a glass plant in Nava, Mexico.
The acquisition will help in gaining better control of its glass needs in terms of quality, flexibility and cost-effectiveness. Additionally, the company believes these actions will help it to make the most of the ongoing momentum and available growth opportunities in its beer business, thereby improving the financial performance.
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.
Apart from Constellation, Church & Dwight Co. Inc. (CHD), The Clorox Company (CLX) and The Kroger Co. (KR) also hit 52-week highs of $81.14, $108.97 and $66.90, respectively, on Jan 15.
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