Is Constellation Brands Inc. (STZ) part of your portfolio? If not, then this is the right time to add the stock as it looks very promising. The stock carries a Zacks Rank #2 (Buy) and has surged roughly 38.7% year over year, demonstrating its inherent strength. We believe that it could prove to be a solid bet for investors.
On analyzing the growth drivers, the primary focus goes toward its positive earnings surprise history. In the trailing six quarters, Constellation Brands has surpassed the Zacks Consensus Estimate five times, adding up to an average surprise of 9.3%, including 7.9% for the last concluded quarter. Since the announcement of the company’s third-quarter fiscal 2015 results on Jan 8, Constellation Brands’ shares have increased 8.3%.
Moreover, shares of this leading international producer and marketer of beverage alcohol brands touched a new 52-week high of $111.73 on Jan 16, before eventually closing at $111.60.
Impressive top-line performance driven by strength in its beer business helped the company to deliver quarterly earnings of $1.23 per share that surpassed the Zacks Consensus Estimate of $1.14 and surged 11.8% from the prior-year quarter.
Net sales also soared nearly 7% to $1,541.5 million from $1,443.3 million in the third quarter of fiscal 2014 and surpassed the Zacks Consensus Estimate of $1,504 million. The increase in the top line was attributed to strong volumes at the beer business, which contributed 16% to the segment’s growth.
Following the strong third-quarter results, the company increased its fiscal 2015 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.
Better-than-expected results and an encouraging outlook triggered an uptrend in the Zacks Consensus Estimate, as analysts have become optimistic about Constellation Brands’ future performance. The Zacks Consensus Estimate increased 2.6% to $4.35 for fiscal 2015 and 1.1% to $4.79 for fiscal 2016 in the past 30 days.
Moreover, Constellation Brands, which competes with Anheuser-Busch InBev SA/NV (BUD) and Diageo plc (DEO), is capable of carrying the growth momentum further, driven by acquisitions and expansions. This is evident from Constellation Brands’ recent 50-50 joint venture with Owens-Illinois and the related acquisition of the glass plant in Nava, Mexico. This acquisition will help the company to gain better control of its glass needs in terms of quality, flexibility and cost-effectiveness.
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 market 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.
Other Stocks That Warrant a Look
A better-ranked stock in the beverages-alcohol industry is Boston Beer Co. Inc. (SAM) sporting a Zacks Rank #1 (Strong Buy).
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
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment